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Daily Market Update July 13, 2021

Early Morning Update

The Aug ‘21 natural gas contract is trading down $0.05 at $3.70.  The Aug ‘21 crude oil contract is down $0.30 at $73.80.

Summary

The NYMEX natural gas market has seen a continuation of its bullish trend, pushing the market higher in each monthly contract from the prompt month through the 2024 calendar strip. Primarily fueled by a larger spread between supply and demand compared to other years, a major contributing factor is disciplined producers refraining from increasing capital expenditures and, thus, production. Though there was a brief drop in production late last week, average production levels have kept within 90-92 Bcf/d. Concern for producers is primarily around the backwardation that that sector of business is facing. Prices further out on the curve fall off from near-term highs, reducing the return on investment that a producer could take. After having been impacted by very low prices for the last couple years, many publicly traded natural gas-producing companies are remaining disciplined and withholding investment in order to create higher returns for their shareholders. Some reports have even claimed that the average producer is looking for prices around $3.82/MMBtu in some regions for them to up production once again. As a result, the market has observed increased long positions from NYMEX speculators in expectations of even higher pricing.

 

Market Update 07 13 2021

Market Settles 07 12 2021

 

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