Daily Market Update October 28, 2021
Early Morning Update
he Nov ‘21 natural gas contract is trading down $0.20 at $6.00. The Dec ‘21 crude oil contract is down $1.06 at $81.60.
Summary
s we tend to see volatility increase as the prompt month approaches its expiration, that was certainly the case yesterday with the Nov '21 contract expiring at $6.202, surpassing the prior day's close by 32 cents. All months in Cal '22 increased yesterday, with Q1 '22 showing the largest gain of 16 cents. While supply and demand is seemingly loosening a bit with production ticking up to 92 Bcf/d and demand softening from above-normal temperatures, it's clear the market is still very uncertain about how this winter will play out and what that could mean for natural gas storage levels as we exit winter. Although prices have climbed significantly over the past several months, the overall mild demand from warmer-than-normal temperatures during the shoulder season has most likely dampened the gains that we could have ensued if we were experiencing an early start to winter instead. The bearish weather has also allowed larger injections into storage, which have improved the end-of-season forecast to now show injections just barely trailing the 5-year average mark by the time we flip to withdrawal season. Market participants are expecting a 92 Bcf injection to be reported later this morning, which would be 60 Bcf larger than the injection reported for this same week last year, and 30 Bcf larger than the 5-year average.
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