Market Update: September 6, 2023

Natural gas prices dropped on Tuesday after the long holiday weekend brought about a milder US weather forecast and a potential agreement in Australia that would keep an LNG worker strike at bay. Some market analysts believe Tuesday’s sell off came as traders expect milder temperatures with the shoulder season officially upon us. A below normal injection is expected once again this week, but that could all change in September as weather maps begin to add some blue into mid-September.

The latest storage report for the EIA stated a build of 32 BCF. Although the build was below historical norms, it was a bit stronger than expected. Storage now sits at 3.115 TCF, which is still over 18% higher than last year and nearly 9% over the 5-year average.

Crude oil rallied this week despite bearish news from China once again. The purchasing managers index (PMI) produced by Caixin/S&P Global dropped the index to the lowest level since December. Some analysts feel that the crude market has higher upside potential due to low inventories and underinvestment in new oilfields.

This week’s additional graphic from the EIA depicts the growth of global import capacity for LNG. During the first half of 2023 Vietnam, Germany and the Philippines began importing LNG. Import capacity globally is expected to grow by roughly 23 BCF per day by the end of 2024. That would be an expansion of roughly 16%.