Daily Market Update August 04, 2022
Early Morning Update
The Sep ‘22 natural gas contract is trading flat at $8.26. The Sep ‘22 crude oil contract is up $0.54 at $91.20.
Summary
The natural gas market had continued volatility, as the prompt month closed at $8.27/MMBtu, up $0.56 day-over-day. The sharp jump in prices occurred after news on the Freeport LNG facility confirmed that roughly 2.0 Bcf/d of LNG will start being delivered in early October. This upward price movement trickled into the outer calendar strips as the 12-month strip gained thirty-eight cents and the Cal’23 strip jumped twenty-five cents on the day. The Cal ’24 strip settled a dime higher, while the Cal ’25-Cal ’28 strips saw very little price movement, all closing out the trading day slightly higher. From a fundamental perspective, supply is largely unchanged, as production steadies near the 95.5 Bcf/d level. Demand fell almost 2.0 Bcf/d day-over-day, mostly due to power burn demand softening coming from the Northeast. Despite some demand relief, total demand is up almost 2.0 Bcf/d from a week ago. For the week ended July 29, Bentek is projecting a storage injection of 36 Bcf, which would be relatively in line with the five-year average and well above the injection for the same week last year. Temperatures in the Central U.S. to the Northeast will remain hotter-than-normal to close out this week. Those temperatures will subside in the Northeast, as the heat will shift to the West and Central regions for the remainder of August.
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