Market Update: February 21, 2024

Natural gas prices remained soft this week as the market is witnessing the impact that light demand and abundant supply are having on inventory levels. The storage surplus grew once again last week as the EIA reported a smaller than average draw of 49 BCF. The latest withdrawal now brings the storage level to 2.535 TCF which is over 11 percent higher than last year and nearly 16 percent higher than the 5-year average. Many analysts believe that the storage surplus will grow in the coming weeks due to warmer weather forecasts persist for much of the country.

Natural gas demand does not appear to be getting any additional help from European LNG as warmer temperatures and healthy storage are also being experienced in that market as well. According to Gas Infrastructure Europe, inventory levels are currently sitting 65.43 percent full, which is above average for this time of year. With depressed prices, analysts are expecting to see an increase in European industrial demand in the coming months.

Baker Hughes reported a drop of two rigs last week bringing the total rig count to 621 rigs. Both dropped rigs were oil rigs. One year ago, the total rig count sat at 760 rigs.

This week’s additional graphic shows the planned power generation retirements that are scheduled to take place in 2024. Only 5.2 gigawatts are scheduled to retire this year compared to the 13.5 gigawatts that retired in 2023. Natural gas and coal fuel account for about 91 percent of the expected retirements this year. Mystic Generating Station in Massachusetts is expected to retire in June along with 16 combustion turbines from the Johnsonville station run by the Tennessee Valley Authority (TVA).