Daily Market Update August 09, 2021
Early Morning Update
The Sep ‘21 natural gas contract is trading down $0.06 at $4.08. The Sep ‘21 crude oil contract is down $2.38 at $65.90.
Summary
Last week’s NYMEX natural gas pricing activity ended on a higher note, once again. The prompt month contract for September gained $0.226/MMBtu throughout the week, settling at $4.140/MMBtu. The bullishness spilled over into much of the front end of the curve, with calendar years 2022-2025 all gaining steam, while the longer terms of calendar years 2026-2030 all lost approximately one cent. Calendar year 2022 lead the pack, gaining $0.132/MMBtu to settle at $3.593, while 2023 gained $0.076/MMBtu to settle at $3.042. U.S. natural gas supplies remain relatively stagnant, hovering between 90-92 Bcf/day, an increase of nearly 3.0 Bcf/day versus August of 2020. However, demand from exports, both LNG and exports to Mexico via pipeline, are up 5.0 Bcf/day. This demand from exports has been a strong demand driver this year, bolstered by strong LNG prices. The question remains: how long will producers stick to capital discipline before higher prices incentivize more production? Weather forecasts are calling for a warm-up this week, which will likely lead to higher demand and the potential for peak demand notifications across ISOs, while putting upward pressure on index pricing.
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