Daily Market Update February 24, 2022
Early Morning Update
The Mar ‘22 natural gas contract is trading up $0.32 at $4.94. The Apr ‘22 crude oil contract is down $7.60 at $99.70.
Summary
Several bullish factors outweighed the warmer overnight revisions to early March forecasts, driving short-term gas prices higher during yesterday’s trading session. Much of the bullish activity was likely sourced from the current international geopolitical tensions, specifically surrounding Germany’s recent certification suspension of the Nord Stream 2 pipeline, which is majority owned by Russia’s state-owned gas giant, Gazprom. The suspension move from Germany was in response to Russia’s aggressive decision to move troops into the Eastern Ukrainian pro-Russian separatist states of Donetsk and Luhansk. While market participants are hopeful that the German suspension of the Nord Stream 2 approval will decrease the potential for war, without Nord Stream 2, Europe, especially Germany, will be much more reliant upon alternative sources of supply for its natural gas.Thus, the Dutch TTF European gas benchmark front contract increased about $2.00 yesterday to just below $30.00/MMBtu, likely putting more upward pressure on prices for domestic natural gas. Coupled with production freeze-offs and another week of below-normal temperatures, the March contract jumped $0.125 day over day and settled at $4.623/MMBtu.As it was with the last several prompt contracts, more volatility may come this afternoon as the contract is set to expire.Median estimates for today’s U.S. Energy Information Administration storage report for the week ended February 18th are close to the five-year average, but below historical benchmarks.Last year’s similar week recorded a 324 Bcf draw, and the 5-year average was a 166 Bcf withdrawal.
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