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Daily Market Update February 03, 2022

Early Morning Update

The Mar ‘22 natural gas contract is trading down $0.57 at $4.93.  The Mar ‘22 crude oil contract is down $1.17 at $87.09.

Summary

Talk about a night and day difference in the market from December to current day. Supply/demand fundamentals have drastically tightened over the past several weeks as cold temperatures moved into the East for much of January, and now revised weather forecasts are showing the chance for a colder trend to linger into the back half of February. The central US, including Texas, is bracing for a severe storm that's making its way East and bringing with it very cold temperatures and the chance for wintry precipitation that could include snow, sleet and freezing rain. This weather system has led to natural gas demand gains of 6.5Bcf/d for today's forecast, while supply levels have slipped to 88.2Bcf/d thanks to freezing temperatures affecting production. As expected, the market has reacted bullishly to this news and the Mar'22 prompt month gained $0.75 yesterday, closing out at $5.501. In fact, the remaining months in '22 starting with April all gained roughly the same amount, about $0.45 each. Something that may lead to even more bullishness in the market is today's EIA storage report. Market participants are expecting a very large withdrawal of around 272 Bcf to be reported, which if actualized, will likely the be the largest of this winter's heating season, and also grow the deficit to the 5 year average and last year's inventory levels.

 

Market Update 02 03 2022

Market Settles 02 02 2022

 

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