Daily Market Update January 05, 2022
Early Morning Update
he Feb ‘22 natural gas contract is trading up $0.11 at $3.83. The Feb ‘22 crude oil contract is up $0.61 at $77.60.
Summary
ollowing last months mild weather, January started off this new year reminding us that winter has just begun. Colder-than-normal temperatures are covering most of the eastern half of the country and seem to linger for the next few days. It’s a complete flip to what we saw last month to close out 2021, with December coming in as the 2nd warmest on record nationally dating back to 1950. The back half of January is currently showing moderating temperatures for the East, but weather models have been changing intraday and should be watched closely. Due to the cold, demand is up and has been causing quite a bit of index volatility over the past couple of days, with snow, not only causing a headache for drivers, but causing hourly price spikes over $100 for power within many zones in PJM. After reaching a new all-time high for production at the end of last month, U.S. dry production has dropped quite a bit, averaging just under 93 Bcf/d to start the year, and most likely caused by well head freeze-offs due to the spike in cold. LNG exports remain high, averaging around 12 Bcf/d. Despite the cold and index price volatility, the NYMEX natural gas futures price for February fell 9.8 cents on the day, settling at $3.717/MMBtu. Tomorrow, due to high supply and mild temps last week, the EIA storage report is expected to report a withdrawal of around 50 Bcf, much lower than the 5-year average benchmark of 108 Bcf.
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