Daily Market Update November 04, 2021
Early Morning Update
he Dec ‘21 natural gas contract is trading up $0.01 at $5.68. The Dec ‘21 crude oil contract is up $1.74 at $82.60.
Summary
oncerns over tightening winter supplies outweighed recent production gains as short-term gas prices strengthened again during yesterday's trading session. The 12-month strip climbed for the second day in a row, gaining $0.048 and settling up to $4.561/MMBtu.Most of the movement within the strip was weighted towards the front of the curve, as the December through March strip increased by $0.126 day-over-day.The biggest mover within the term was the January 2022 contract, which settled $0.140 higher to $5.780/MMBtu. Market participants are likely fearful of several bullish demand factors that may further dent inventory levels headed into this winter, including the current wintry conditions moving across the northern U.S., colder revisions to mid-November forecasts, and uncertainties around European restocking.However, the 0.8 Bcf/d of week-over-week production gains and today's potentially bearish storage report may cause the market to retract. Expectations for today’s U.S. Energy Information Administration storage report are around 68 Bcf for week the ended October 29th, much larger than last year’s 27 Bcf and the 38 Bcf five-year average.Market participants are gaining confidence that we will enter winter close to the critical 3.6 Tcf storage level, depending upon the timing and substance behind the market’s first withdrawal, likely landing in two weeks.
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