Daily Market Update August 17, 2021
Early Morning Update
The Sep ‘21 natural gas contract is trading down $0.05 at $3.89. The Sep ‘21 crude oil contract is down $0.29 at $67.00.
Summary
The natural gas market got off to a strong start in the first trading session of the week, as the prompt month climbed 8.5 cents to settle at $3.946/MMBtu. The bullishness was limited to the front of the pricing curve, with Cal ‘22 up three cents at $3.515, and the rest of the curve out through 2033 up just a penny. U.S. dry production has been slipping, now down 1.5 Bcf/d to 90.1 Bcf/d since last Thursday, and imports from Canada have declined by 0.7 Bcf/d, bringing the total of natural gas supply to 94.7 Bcf/d, down 2.2 Bcf/d since late last week. Cushioning the loss of supply’s effect on prices is the downtrend in demand, which is also down 8.6 Bcf/d over the same period. Nearly all of this drop is due to falling power burn, which contributed 8.4 Bcf/d to the total drop in demand. Meanwhile, with the trend to higher natural gas prices, coal has been making a comeback in PJM and MISO. Compared to last summer, coal generation is up 20% in PJM, while gas generation is down 7% vs. last summer. Eastern Gas South prices are more than $1/MMBtu higher this summer than last, propelling the switch from gas back to coal. This trend will likely continue at least through the coming winter, as Henry Hub prices, as well as regional gas basis prices are projected to stay strong.
Loading please wait...