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Weekly Energy Market Update 09/13

Natural Gas

Neutral/ Bearish

​Crude Oil






Weekly Natural Gas Report

The Energy Information Administration (EIA) reported an injection of 33 Bcf into underground storage for the week ending September 1, 2023. Inventories are 3,148 Bcf; gas inventories are 222 Bcf greater than the five-year average and 462 Bcf greater than the same time last year.

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. In the first half of 2023 natural gas used for power generation has increased 10% or 3.5 BCF per day compared to the first half of 2022. 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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