Daily Market Update September 27, 2021
Early Morning Update
he Oct ‘21 natural gas contract is trading up $0.30 at $5.44. The Nov ‘21 crude oil contract is up $1.52 at $75.50.
Summary
as and power pricing have been incredibly bullish over the past 30 days.On 8/28, the October contract debuted as the prompt month at $4.37 and then settled last Friday (9/24) at $5.14, a move up of 77 cents (18%). The NYMEX move higher wasn’t just confined to the prompt month – Q1 ‘22 on 8/28 settled at $4.40 and, on Friday, closed at $5.21 – a move up of 81 cents (18%) month-over-month. While not increasing as sharply, the longer terms (Cals ‘24-‘26) have moved higher 14 cents from $2.86 on 8/28 to $3 (5%) on Friday.Power forwards are tightly correlated and have moved higher, notably for the upcoming winter, with Q1 ‘22 on peak pricing for Mass Hub trading at $130/MWh, and ERCOT North Hub trading at $69 – up $20 and $10/MWh, respectively, over the past month.In looking back, the market fundamentals of stalled growth and shut-in production, demand outpacing supply (notably from LNG exports), and storage deficits compared to history all paint the picture of increased prices.Until the market feels these fundamentals are being addressed to balance the market via a combination of increased production, above-average winter temps, and decreasing demand, the bullish sentiment may remain and continue to drive prices even higher than the historically large increases we’ve seen this month.
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