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Weekly Energy Market Update 06/28



Natural Gas

Bullish

​Crude Oil

Neutral

Economy

Neutral

Weather

Bullish

Weekly Natural Gas Report


The Energy Information Administration (EIA) reported an injection of 95 Bcf into underground storage for the week ending June 16. Inventories are 2,729 Bcf; gas inventories are 15% greater than the five-year average and 26% greater than the same time last year. For the week ending June 13, Baker Hughes reports 130 natural gas rigs in operation, down 5 from the prior week. Crude oil rigs were reported at 552, down 4 for the same period.



BOX Holiday Closing


In observance of Independence Day, BOX will be closed Monday, July 3rd and Tuesday, July 4th 2023. The portal will have Friday’s matrix prices through these dates. Please note that any contracts submitted after 5pm EST on Friday will be subject to change due to Wednesday’s market movement.


Why Buy Now?


Having trouble closing deals due to high rates? We're here to provide you with the information you need to answer the recurring question; Why buy now?

We break down the answer to this question so you can come to the table with all the information you need to help your customer navigate these unprecedented market conditions.


Rig Count Drop Likely to Decrease Future Production

A drop in rig counts can have a significant impact on natural gas prices, primarily by affecting the supply-demand balance in the market. Rig counts serve as a crucial indicator of drilling activity and production levels in the natural gas sector. When the number of active drilling rigs declines, it suggests a slowdown in new exploration and extraction efforts, leading to a decrease in natural gas production. The decrease in production can result in a reduced overall supply of natural gas available in the market. The reduced supply coupled with expected increasing demand, creates a scenario where prices are likely to rise.



Natural Gas Exports are Soaring

With the loss of a major pipeline between Russia and Europe and Asia’s increasing demand, countries around the world are forced to source gas outside their boundaries, and the United States is the top new supplier. This provides U.S. producers with the opportunity to sell LNG gas overseas much higher than domestic prices. In this situation, coupled with low storage levels, domestic natural gas prices would increase significantly.


Natural Gas Power Generation is Booming

Since 2010, the use of natural gas for power generation in the US has skyrocketed due to its affordability, environmental advantages, and the development of shale fracking. Currently, the six-week average demand for power generation has increased by 4 BCF per day compared to last year. This upward trend is expected to continue for many years to come.




In Summary

There is a very real risk that prices could move higher this summer due to stagnant supply and increasing demand. With the market at 12-month lows, right now is a great opportunity to take risk off the table and purchase all or a portion of their energy supply costs.



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