Market Updates

Market Update: January 17, 2024

NYMEX natural gas prices rallied last week as freezing temperatures pummeled most of the country. The February contract traded up nearly 11 percent on the week as analysts kept a close eye on shifting weather forecasts. Traders started this week on Tuesday watching the front contract trade lower as short term forecast maps turned orange over the long weekend. Prices at Henry Hub, which acts as the US benchmark, traded near a three-year high.

The latest storage report from the EIA stated a draw of 140 BCF which was larger than most analysts expected. The larger draw brought the storage level to 3.336 TCF which is still 436 BCF above last year and 348 BCF above the 5-year average. The current storage surplus is expected to fall over the next few weeks as the colder temperatures should make a dent in inventory. The next release on Thursday is expected by some analysts to be a draw around the 160 BCF level which compares to last year’s draw of 68 BCF and the 5-year average draw of 126 BCF.

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 24-30, 2024 | NOAA

Crude oil moved sideways this week despite a turbulent week geopolitically in the Middle East. Additional attacks in the Red Sea by Houthi rebels caused the US and UK to strike Houthi strongholds in Yemen. The Houthi leadership vows to continue obstructing the shipping lanes. Some tankers are either diverting course or pausing transits through the Red Seas until stability can be restored.

The latest rig count from Baker Hughes reported a net drop of two rigs bringing the new total to 619. Oil rigs fell by two, gas rigs fell by one and miscellaneous rigs rose by one. One year ago, the total rig count sat at 775 rigs.

This week’s additional graphic from the EIA shows their projection for natural gas prices at Henry Hub for 2024 and 2025. Although both years are predicted to average under $3.00 a rise is expected as they expect demand growth to be greater than growth in supply.

Monthly Henry Hub natural gas spot price (Jan 2020-Dec 2025) | EIA

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