Market Update: November 8, 2023

Natural gas prices fell off this week as bearish fundamentals remained in play for many traders and analysts. Production continues to hover near all-time highs while warmer weather forecasts are expected to weaken demand. Cooler air is expected in the mid-continent for the next few days before warmer temperatures return and are expected to remain near the end of November.

The latest storage report from the EIA stated a build of 79 BCF which boosted the inventory level to 3.779 TCF. Current levels are now 293 BCF above last year and 205 BCF above the 5-year average. Market estimates for next week range from a small withdrawal to a small build due to the cold blast that we saw last week. The impact of this number could be minimized as the EIA will not be releasing a storage report this week due to a system upgrade on November 8th and 9th. The next storage report will be released on November 16th where data from weeks ending November 3rd and November 10th will be stated.

Crude oil tumbled this week as the December contract trades near $76.00 this morning. The drop is being attributed to a stronger dollar as the market is now increasing the possibility of another interest rate hike at the next Federal Reserve meeting.

According to Baker Hughes the latest rig count showed a net drop of seven rigs bringing the new total rig count to 618 rigs. Oil rigs fell by eight as gas rigs rose by one. One year ago, the total rig count sat at 770 rigs.

This week’s additional graphic published in this morning’s Platts Gas Daily is from the EIA and gives a snapshot of the supply/demand picture in the United States. Strong production is one of the highlights as the EIA is estimating that dry gas production will average almost 105 BCF per day in the back half of 2023. This would be up nearly 2 BCF per day from the first half of the year.