Market Update: February 14, 2024

Natural gas fundamentals continue to be weak this week. Production has fully recovered from the freeze offs experienced over the Martin Luther King Jr. holiday. It has currently returned near 105 BCF per day after bottoming out just over 88 BCF per day just a few weeks ago. Another bearish factor also came from a change in the European weather model as a steep decline in heating degree days appears to be on the horizon for the near term. The latest 6-10- and 8-14-day forecasts have warmed up significantly from just one week ago. The lack of demand along with the healthy production scenario are now causing some analysts to think we may end the winter withdrawal season around 2 TCF in storage which would mean that we start the spring in an oversupplied situation.

The latest storage report from the EIA stated a draw of only 75 BCF which brings the inventory level to 2.584 TCF. This level is now 187 BCF above last year and 248 BCF above the 5-year average.

Crude oil traded up this week as Israel carried out strikes in the southern Gaza city of Rafah as it is being reported that two more hostages were rescued. Trading volumes were also down this week as some of the Asian markets closed to celebrate the Chinese New Year. This week also brings monthly reports concerning the EIA, OPEC and US inflation. These figures will be watched closely to see how they may impact interest rates.

According to Baker Hughes the latest rig count rose by four to 623 total rigs. All four of the rigs were gas rigs. One year ago, the total rig count sat at 761 rigs.

The additional graphic from the EIA shows the forecasted spot prices at Henry Hub for 2024 and 2025. The Short-Term Energy Outlook is expecting prices to be higher in both years compared to 2023, but average under the $3.00 mark.