Daily Market Update August 26, 2022
Early Morning Update
The Sep ‘22 natural gas contract is trading up $0.07 at $9.44. The Oct ‘22 crude oil contract is up $0.26 at $92.78.
Summary
Despite all the intraday movement on the NYMEX Henry Hub over the last week, the settle from last Friday to yesterday had only seen a 4.5c/Dth increase for prompt month. Supply and demand are always a driving factor for the commodities markets, so seeing weak production and strong demand is a large concern for market participants. Production has dipped below the 96Bcf/d expectation, likely contributing to the volatility natural gas has been seeing. Meanwhile, the demand was expecting to see some relief from generally cooler temperatures. While this is primarily still true as Texas heat is not nearly as bad as it was in July, many large swaths of the country are still expecting further heat all the way out through the 20-day outlook. One other weather related thing to consider would be the Atlantic hurricane season which can have drastic impacts on both supply and demand. Most active during September, hurricanes can bring in a lot of cloud cover and rain, potentially cooling and reducing power demand for natural gas, a good thing for buyers from a market perspective. Alternatively, they can impact the actual production as well, bringing in the opposite price movement. One thing is certain, these extreme weather events have the potential to bring more volatility into the already wild market in the next couple months, so keep an eye out.
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