Daily Market Update July 22, 2022
Early Morning Update
The Aug ‘22 natural gas contract is trading up $0.16 at $8.09. The Sep ‘22 crude oil contract is down $1.03 at $95.32.
Summary
Massive volatility at the front of the curve yesterday with the prompt month trading in a nearly 60c range. The EIA reported a lower-than-expected build into storage of just 32 Bcf. The market rallied after the report, trading all the way up to $8.176 before ultimately settling at $7.932, down $0.075 on the day. High temps and high a/c demand have led to very high demand for natural gas-fired generation. The US is burning 6 Bcf/d more this year compared to last year for power generation as heat bastes the country. For much of the next three weeks, most of the country will experience above-average temps - which means high demand is likely to continue. In addition to high power generation demand, we are also seeing very high index prices for power. We are seeing index prices normally reserved for intensely cold winter days but high demand and high gas prices = high power prices. The impact is being felt throughout the curve as longer-term power prices move higher as well.
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