Futures prices for natural gas have reliably stayed above $3 per MMBtu for the past month. Elevated pricing support comes amid the third largest amount of natural gas left in storage in the past 10 years, suggesting traders still see some market tightening as the summer approaches.
Demand from exports has provided some of this support, and expectations for additional liquefied natural gas (LNG) export capacity from Sabine followed by Cove Point later this year are likely factors. But natural gas is not the only commodity defining price stability or not. Oil prices had remained reliably above $50 for months until just recently when West Texas Intermediate crude slipped below. Both commodities, oil and natural gas, are priced at a level that appears to be attractive to producers.
Oil and gas rigs are now more than double the count from their respective lows established last year. The question, at least to this analyst, is how well the natural gas market is pricing in the expected future flows from new production? Will the market continue to tighten? Or will new production volumes surprise us all?
Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.