Market Updates

Market Update: January 3, 2024

Natural gas prices ticked higher this week as analysts came in from the long holiday weekend to colder weather forecasts compared to what was seen during the last week of December. Although the European and American models both trended colder for much of the west and mid-continent, the cooler temperatures are not forecast to move as aggressively eastward as they once showed during the break. Analyst Eli Rubin from EBW Analytics Group said although the longer-term outlook continues to be oversupplied, a “brief probe higher” could be seen with warmer temperatures fading and “moderate freeze-off risks” for some regions such as the Bakken, Rockies and Midcontinent. He also believes that the technical indicators seem “modestly constructive”.

The latest storage report from the EIA showed another draw of 87 BCF which brings the inventory level to 3.490 TCF. This level is 348 BCF higher than last year and 316 BCF higher than 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 10-16, 2024 | NOAA

Crude oil traded off this week but remains volatile as tensions in the Red Sea grew over the weekend. Three Houthi rebel boats backed by Iran were sunk by US helicopters after they attacked the container ship, Maersk Hangzhou. The rebels are attacking freight ships in the Red Sea in an attempt to shut down commercial shipping lanes. The Maersk has currently paused shipments through the Gulf of Aden and the Red Sea. Other container ships may choose to do the same thing until safety can be restored.

According to Baker Hughes the total rig count increased by two last week to end the year at 622 total rigs. Both new rigs were oil rigs. One year ago, the total rig count sat at 779 rigs.

This week’s additional graphic from the EIA illustrates the difference in Brent crude prices from 2022 to 2023. Brent prices averaged approximately $19 less in 2023 than they did in 2022. Lighter global demand appeared to more than offset the supply cuts announced from the OPEC plus cartel. For information purposes Brent crude is used as the benchmark in Africa, Europe and the Middle East. West Texas Intermediate (WTI) is the benchmark for US sourced oil.

Brent crude oil daily spot price (2022 and 2023) | EIA

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