Market Updates

Market Update: August 30, 2023

Natural gas prices bounced off the lower trading band early this week as hotter temperatures are expected to return. Both the American and European models agree that additional cooling degree days are in store for much of the country into the second week of September.

This weekend also saw the development of tropical storm Idalia off the coast of western Cuba. The storm has since hit category four status and is expected to hit the Big Bend area of Florida later this morning. A major hurricane is considered anything over category three with sustained winds over 110 miles per hour. The good news is that the storm failed to hit the major production region of the Gulf of Mexico. The bad news is that significant demand destruction is expected for several days before the system spins off into the Atlantic Ocean.

The latest EIA report stated a relatively small build of just 18 BCF. The latest injection brings storage levels to 3.083 TCF which is 513 BCF above last year and 268 BCF above the 5-year average.

NYMEX Natural Gas Futures

Electric Pricing Forward Calendar Strips

Working gas in underground storage compared with the 5-year maximum and minimum | EIA

Temperature Outlook: September 6-12, 2023 | NOAA

Crude oil once again is trading over the $81.00 mark as the Chinese economy remains the wildcard as to the strength of this market. Some analysts believe that significant upside remains for crude prices with tight supply and the potential for economic expansion in China. It is also being reported that US government is now considering lifting Iranian and Venezuelan sanctions to free up supply.

According to Baker Hughes the total rig count dropped by ten last week to 632 rigs. Eight of the rigs were oil, while two of the rigs were gas. One year ago, the total rig count sat at 765 rigs.

This week’s additional graphic from the EIA shows the demand growth of natural gas in Florida as the power generation stack is changing. Natural gas accounted for 31% of the electric generation demand in 2002 while that number jumped to 75% in 2022. Coal and oil plants have declined as natural gas capacity has increased in Florida.

Annual electricity generation by source, Florida (2002-2022) | EIA

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