Daily Market Update July 28, 2022
Early Morning Update
The Sep ‘22 natural gas contract is trading up $0.07 at $8.62. The Sep ‘22 crude oil contract is up $1.97 at $99.23.
Summary
The natural gas market had continued volatility as the prompt month closed at $8.687/MMBtu. Only a day earlier, it reached a trading high of $9.752/MMBtu. The 12-month strip pulled back slightly yesterday to settle below the $7 mark at $6.947/MMBtu after trending upwards all of July. The Cal ’23 strip finished out July at $5.54/MMBtu, up eighty-nine cents from a month ago. For the Cal ’24 strip, it gained twelve cents on the month, closing at $4.69/MMBtu. The Cal ’25-’28 strips saw very little movement throughout the month as near-term volatility is the focus. These strips settled between the $4.53-$4.35/MMBtu range, which was slightly down from June. From a fundamental perspective, supply and demand are flat day-over-day. Production held steady near the 95 Bcf/d level, keeping total supply at 100.8 Bcf/d. Demand has fell off from a week ago when it hit 98.9 Bcf/d and went unchanged to stay at 95.8 Bcf/d day-over-day. Power burn demand contributed the most to that decline as it weakened nearly 3 Bcf/d since last week. For the week ended July 22, the U.S. Energy Information Agency is projecting a 19 Bcf injection. An injection of that level would be the smallest of the season, mostly due to the hot temperatures across the country driving up natural gas consumption for power burn demand. Temperatures in the Pacific Northwest will face extreme heat for the remainder of July. Weather for the beginning of August will bring broad warmth covering most of the country.
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