Market Update: September 27, 2023

Natural gas prices continued to be rangebound this week as the October contract rolls off the board with today’s settlement. The November contract will begin tomorrow. Cash prices softened throughout the month of September as cooler temperatures replaced the higher cooling demand days that we witnessed in August and early September. Power burn during those months diminished the storage surplus but milder temperatures are expected to replenish inventory levels somewhat before the winter withdrawal season begins. Analysts will be closely watching to see just how much cushion there will be before the colder temperatures arrive.

Last week’s storage report from the EIA stated an injection of 64 BCF bringing inventory levels to 3.269 TCF. That level is 410 BCF above last year and 183 BCF above the 5-year average.

The October crude oil contract settled earlier this week at $90.28 as the November contract trades near the $92.00 mark this morning. Some analysts point out that crude strength in this shoulder season is occurring due to the global undersupply that we are currently experiencing. It is also important to note the US Department of Energy is reporting that inventory levels of the strategic petroleum reserve (SPR) rose by 300,000 barrels last week as the government tries to replenish it.

The latest rig count figures from Baker Hughes reported a net decline of eleven rigs bringing the total rig down to 630 rigs. Oil rigs fell by eight while gas rigs dropped by three. One year ago, the total rig count sat at 764 rigs.

This week’s additional graphic from the EIA highlights the growth and decline of the storage surplus in the United States since the beginning of the year.