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Daily Market Update January 27, 2022

Early Morning Update

The Feb ‘22 natural gas contract is trading down $0.01 at $4.27. The Mar ‘22 crude oil contract is up $0.65 at $88.00.

Summary

Expectations of weather-driven storage erosion likely had the biggest influence on yesterday’s short-term gas rally.Due to January’s well-below-normal temperatures, each of the last two storage withdrawals reported by the U.S. Energy Information Administration (EIA) were larger than both the market’s expectations and the associated historical benchmarks. As such, the end-of-withdrawal season estimate has been revised downwards to below 1.4 Tcf, lower than the end-of-winter levels from both 2021 and 2020.Considering the last two weeks of the current cold spell haven’t yet been captured by the storage report, it’s likely this trend of large withdrawals will continue, further bruising estimates for the end of season stockpile.The median consensus within most polls for today’s EIA storage report is a withdrawal of around 215 Bcf, again, much larger than the historical benchmarks. Looking beyond the preceding two weeks of cold, preliminary forecasts for the next few weeks have unfortunately undergone colder revisions, instilling more fear in market participants for the balance of this and next winter.Thus, the prompt month gained $0.224 cents and settled up to $4.277/MMBtu.Technical trading also likely impacted the February contract’s surge, as the term is set to roll off the board at the end of today’s trading session.Over the last year, the final two trading days for the prompt month contract have proven to be quite volatile.The rest of the 12-month strip strengthened by $0.128 and closed at $4.185/MMBtu.

 

Market Update 01 27 2022

Market Settles 01 26 2022

 

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