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TPI Market Snapshot for July 10 2023

Natural Gas • Energy • Weather • Weekly Market Headlines

EIA: WEEKLY NATURAL GAS STORAGE

EIA Natural gas storage report chart

Natural Gas stayed relatively stable the last week as increased production for the week offset the higher cooling demand. We also saw a higher injection in the past week than last year and the five-year average.

This kept prompt month pricing at around $2.60, but we also saw the 12-month strip increase and equal the five-year average for Natural Gas pricing.

NATURAL GAS: NYMEX TWELVE-MONTH STRIP

NYMEX TWELVE MONTH STRIP - natural gas
NYMEX TWELVE MONTH STRIP natural gas

The demand for Natural Gas now exceeds the 5-year average and last year’s demand, and the five-year demand range. Industrial and power burn demand has increased, but the real culprit is higher LNG exports, which are only expected to increase.

WHAT IS NYMEX ANYWAY, AND WHY IT MATTERS

  • The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
  • It is a futures strip, which is the buying or selling of futures contracts in sequential delivery months traded as a single transaction
  • The NYMEX Twelve Month Strip can be used to lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
  • The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
  • The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
  • The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.

NYMEX 12-MONTH ROLLING STRIP MATCHES FIVE YEAR AVERAGE

NYMEX 12 MONTH ROLLING STRIP MATCHES FIVE YEAR AVERAGE

NATURAL GAS DEMAND NOW EXCEEDS THE FIVE-YEAR RANGE

NATURAL GAS DEMAND NOW EXCEEDS THE FIVE-YEAR RANGE

WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK

MAP: US weather forecast map
<em>MAP US weather forecast map<em>
  • The 100-degree plus heat we saw across AZ, NM, and TX last week will extend into the Central Valley of CA. This heat wave will cause a significant rise in Cooling Demand and a higher demand for Natural Gas.
  • Further out in the 8–14-day forecast, warmer weather will ease slightly, but the below-average temperatures in the Western Great Lakes and Midwest will switch to hotter temperatures.
  • Hurricane season begins June 1 and runs through October. This year the NOAA is projecting 12-17 Tropical Storms, 5-9 named hurricanes, and 2-4 major hurricanes. A strong El Nino in the Pacific usually leads to stronger wind shear in the Atlantic. However, if it does not fully develop, a much warmer Atlantic and Caribbean could lead to more numerous and stronger hurricanes.