Market Update: March 27, 2024

Due to lower demand and the anticipation of increased storage levels during the shoulder season, NYMEX natural gas futures traded lower as the April contract expired. Despite weather forecasts in the 8-15 day period expected to modestly boost demand for heating, the robust gas storage continues to dampen natural gas futures. Extended maintenance at the Freeport LNG export terminal, along with other maintenance issues, will contribute to a surplus of natural gas.

The latest storage report from the EIA stated an increase of 7 BCF. The current inventory level now sits at 2.332 TCF, which is 21.4 percent higher than last year and 41 percent higher than the 5-year average.

According to Baker Hughes the latest rig count dropped by five to 624 total rigs. Oil rigs fell by one and gas rigs fell by four. One year ago, the total rig count stood at 758 rigs.

This week’s additional graphic shows exploration and production (E&P) companies’ announced global spending on mergers and acquisitions from 2011 to 2023. In 2023, E&P companies spent $234 billion on mergers and acquisitions, marking the highest spending since 2012. This resurgence follows a period of reduced transactions due to oil market volatility in 2020 and 2022, signaling a return to consolidation among US oil companies.