Market Update: November 15, 2023

NYMEX natural gas prices for December traded down last week before rallying over 16 cents on Monday after a colder weather forecast came out over the weekend. Very strong production and mild temperatures played roles in the price drop as they allow storage to maintain stable footing as we move toward the end of the calendar year.

No storage report was delivered by the EIA last week (week ended Nov. 3) as they were performing system maintenance. Estimates for that week, however, ranged from an injection of 21 BCF to a withdrawal of 20 BCF according to Reuters. Median estimates were for a draw of 7 BCF as Natural Gas Intelligence modeled a draw of 9 BCF. The 5-year average for that week was an injection of 36 BCF. For the week ending Nov. 10 a stronger injection is expected although modeling could get more complicated this time of year as some public utility commissions mandate that their utilities pull some gas from storage. There is currently 3.779 TCF in the ground compared to the 5-year average of 3.574 TCF.

Crude oil has also bounced back as some analysts feel the recent collapse was overdone as the global supply/demand picture could warrant higher prices. Tensions in the Middle East also continue to be monitored as the US recently bombed sites in Syria that were suspected of being backed by the Iranian regime. There are also now talks of the EU issuing sanctions on Iran for its support of Hamas who was behind the October 7th massacre that left over 1200 people dead.

The total rig count fell by two according to the latest count by Baker Hughes. Both rigs that dropped were oil rigs. The current rig count stands at 616 rigs which is 163 rigs less than one year ago.

This week’s additional graphic from the EIA illustrates the North American LNG export capacity picture. The expectation is for LNG capacity to more than double by 2028 as Canada and Mexico put their first export terminals in play.