Market Update: February 7, 2024

Natural gas prices traded sideways to start the month of February as traders wait to see if this winter has any more cold blasts in store. This week saw above normal temperatures causing cash prices to drop for most mid-continent hubs. Short term weather forecasts are cooler than last week but remain close to seasonal norms for much of the country.

The latest storage report from the EIA showed another large draw but remains 54 BCF above last year and 130 BCF above the 5-year average. The current gas in storage sits at 2.659 TCF. Mild weather conditions for the first two weeks of February are expected to cause the next few storage reports to increase the surplus.

Crude oil slid as a stronger US dollar appears to be keeping a lid on prices for the time being. Tensions remain in the Middle East as the US carried out retaliation strikes against Houthi targets in Yemen and Iranian backed militants in Iraq and Syria. The US Secretary of State, Antony Blinken, returns to the Middle East in an attempt to calm tensions and negotiate a hostage release between Israel and Hamas.

According to Baker Hughes the latest rig count showed a net decrease of two rigs bringing the new total to 619 rigs. Oil rigs remained unchanged while gas rigs fell by two. One year ago, the total rig count sat at 759 rigs.

This week’s additional graphic from S&P Global Commodity Insights illustrates daily consumption in the US for natural gas. It is important to note that the US reached a record high of 141.5 BCF on January 16, 2024. The previous record of 137.8 BCF was attained on December 23, 2022. Frigid temperatures drove heating demand and power generation to the record levels.