Market Update: September 20, 2023

Natural gas prices trended up this week as traders continue to watch storage surpluses decline. Record heat in Texas this summer caused a surge in power demand which was largely responsible for cutting surplus inventory levels in half. The latest storage report from the EIA stated a build of 57 BCF bringing the new total to 3.205 TCF. At this level storage is now 445 BCF higher than last year and 203 BCF higher than the 5-year average.

Inventory levels in Europe are in very good shape compared to last year as some analysts are reporting that storage is already 95% full.

It is also important to note that we are currently in prime season for tropical activity with warm ocean temperatures, high Atlantic humidity and relatively low wind shear. Currently Hurricane Nigel in the Atlantic is no threat to the United States, but additional storm probabilities are happening with multiple waves forming off the western coast of Africa.

Crude oil traded higher this week as the market witnessed tighter supplies of many crude related products such as jet fuel, diesel and gasoline. Lower export volumes from Saudia Arabia and Russia are also providing market support. Many analysts are also speculating that the US will not raise interest rates this week causing some hedge funds to come back into crude oil.

The latest rig count from Baker Hughes reported an increase of nine total rigs bringing the new total to 641 rigs. Oil rigs increased by two, gas rigs increased by eight and miscellaneous rigs fell by one. One year ago, the total rig count sat at 763 rigs.

This week’s additional graphic from the EIA highlights LNG exports during the first half of 2023. The report states that the US exported more LNG than any other country in that time frame. According to the US Department of Energy, the US averaged 11.6 BCF per day in exports which is about half a BCF more than it exported in the first half of 2022.