Market Updates

Market Update: November 1, 2023

Midcontinent cash prices in the natural gas market rallied as a cold blast spiked heating demand for the last few days of October. Freezing temperatures bumped prices in Oklahoma and Chicago over 40% higher than prices seen earlier in the month. The cold blast is expected to be short-lived as forecasts are calling for above average temperature probabilities for much of the country into the third week of November. Futures prices for December appear to be looking for a range around the $3.50 level as the mild November outlook and strong production could see an ending storage balance near a healthy 3.8 TCF level.

The storage report from the EIA stated a build of 74 BCF which brings current inventory to 3.7 TCF. This level is 183 BCF higher than the 5-year average and 313 BCF higher than last year. The EIA also noted that it will be doing a planned system upgrade so storage releases will be delayed during November 8-10th. Data will continue to be collected and the normal inventory reports will resume on November 13th.

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: November 8-14, 2023 | NOAA

It appears that the war premium has currently been taken out of the crude oil market as the December contract traded down near the $81.00 level. The market continues to watch Iranian oil flow as any disruption could pose a large risk to prices. Currently there appears to be no plans to shut down the Iranian supply.

The latest rig count from Baker Hughes reported an increase of one rig bringing the total rig count to 625 rigs. Oil rigs increased by two while gas rigs fell by one. One year ago, the total rig count sat at 768 rigs.

This week’s additional graphic focuses on the natural gas rig count as reported by Baker Hughes. Natural gas rigs have fallen by roughly 24% in 2023. Natural gas drilling activity dropped this year as prices did not sustain the strength which was seen in 2022.

US weekly natural gas-directed active rig count (Jan 6,2017-Oct 20, 2023) | EIA

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