Daily Market Update January 04, 2022
Early Morning Update
he Feb ‘22 natural gas contract is trading up $0.08 at $3.90. The Feb ‘22 crude oil contract is up $1.59 at $76.80.
Summary
he February prompt month showed some strength on Monday, gaining steam from widespread colder temperatures and sharply decreased production across the country. The front contract rose over eight cents in the first trading session of the new year to $3.815/MMBu, the 12-month strip gained 11 cents to $3.81/MMBtu, 2023 moved up six cents to $3.42/MMBtu, and 2024 through 2026 ticked up a few cents apiece. Northern-focused cold has swept across the upper Midwest and East Coast, with expected temperatures coming in potentially double-digits below normal. Gas spot prices in the Northeast reflected the colder weather turn, and perhaps received some influence from rising global LNG pricing, increasing by over 100% day-over-day at certain trading points. Nationwide production has moved down by around 3 to 5%, which is not uncommon around the holidays, but the weather could also be contributing through freeze-offs in areas most affected by the current cold spell. If freeze-offs are, indeed, the culprit of faltering production, the decline should be short-lived with the return of warmer-than-normal temperatures, and natural gas production could bounce back to the near record highs seen last week.
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