Daily Market Update April 21, 2022
Early Morning Update
The May ‘22 natural gas contract is trading up $0.20 at $7.14. The May ‘22 crude oil contract is up $0.91 at $103.10.
Summary
Volatility in the short-term gas market continued Wednesday with another day-over-day selloff. Given the lack of any material fundamental changes, the most immediate drivers behind yesterday's slide were likely profit-taking and possible expectations of weather-driven demand destruction in early May. Most forecast models showed slightly warmer day-over-day revisions, especially for the 11-15 day forecasts. The prompt contract settled at $6.937/MMBtu, down $0.24 from Tuesday.The rest of the contracts within the 12-month strip performed similarly, as the average of the term settled at $6.887/MMBtu, down $0.20. A secondary driver was possibly the expectation of a less undersupplied market ahead of summer.In the latest Drilling Productivity Report, the Energy Information Administration expects about 700 Mcf of additional year-over-year gas production to come online next month, which is about half of the current daily balance deficit.This news is less bullish for storage, which currently sits at 1,397 Bcf, a 439 Bcf deficit to the 5-year average.The median expectation for today's injection report amongst the various polls falls somewhere around a 40 Bcf build, close to historical benchmarks.Go-forward injections will likely have to outpace the historical benchmarks by a significant margin for the rest of build season in order to rebalance the market.
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