Daily Market Update March 30, 2022
Early Morning Update
The May ‘22 natural gas contract is trading up $0.12 at $5.45. The May ‘22 crude oil contract is up $3.96 at $108.20.
Summary
Despite colder temperatures that blanketed most of the Northeast, the April contract went out like a lamb, dropping 17.2 cents on the day to settle at $5.336/MMBtu. The moderating changes to forecasts for the majority of the country over the next couple of weeks seemed to have helped soften the market slightly this week. The EIA storage report tomorrow is expected to mark the first injection of the season, coming in about a week early, similar to what was seen last year. However, due to the shot of cold this week, we may still see a small withdrawal reported next week. Market movements have been very reactive to weather forecasts in the current tight supply/demand environment, and if we see any signs of an early start to summer, it could signal continued strength in near-term prices. We have seen higher oil prices provide a positive effect to rig counts, but have yet to see much of that supply reach the market. LNG exports remain near peak capacity just under 13.5 Bcf/d. Questions remain as to what effects the Biden Administration’s announcement last week regarding increasing exports to Europe will have on the market. About 60% of the contracts currently in place are not destination-specific and have already been deviated this year, leading to an increase very close to what the President is promising. The U.S. is exporting near peak capacity, and, until Calcasieu Pass is fully commercial this summer, there is not much more that can be done. U.S. dry production has averaged just over 94.0 Bcf/d for the last week, increasing slightly month-over-month.
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