Market Updates

Market Update: December 27, 2023

Natural gas prices worked their way up late last week on a stronger than expected storage withdrawal and some potentially cooler weather systems from some of the long-range weather models. That move up gave some bullish investors some hope as thus far strong production and unseasonably light demand have been the stories of the winter. Bullish traders were looking to see some follow through with the weather models as they returned from the long holiday weekend but were disappointed to see that the latest forecast remained lackluster. Strong production and the delayed completion of the Golden Pass LNG terminal added to the weakness. According to Wood Mackenzie production remained over 106 BCF per day over the holiday break as they estimate the seven-day moving average to be 106.4 BCF per day.

The latest storage report from the EIA showed a draw of 87 BCF. The latest report brings inventory levels to 3.577 TCF which is 240 BCF above last year and 280 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: Jan 3-9, 2023 | NOAA

Crude oil prices are up on the week as shipping disruptions in the Red Sea continue to be an issue. A security force led by the US has been deployed in an effort to prevent attacks led by Houthi rebels. Full shipments are expected to resume once security is restored.

The latest rig count reported by Baker Hughes shows a total drop of three rigs. Oil rigs fell by three, gas rigs rose by one and miscellaneous rigs fell by one to bring the new total rig count to 620 rigs. One year ago, the total rig count sat at 779 rigs.

This week’s additional graphic from the EIA illustrates the nuclear power additions over the last 53 years. This year saw unit 3 come online at the Vogtle plant in Georgia. The capacity of unit 3 is 1114 megawatts. This plant should offset some gas demand in the region going forward. The last nuclear addition in the United States was Watts Bar 2 in Tennessee in 2016.

Annual associated natural gas production and gas-to-oil ratio from oil wells in the three major oil plays in the Permian region (2013-2023) | EIA


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