Happy Friday
The NYMEX October Front month contact turned around from yesterday’s bullish storage report and sold off 5 cents to $2.29 US/mm, right at that important level I have been talking about. Like most Fridays, the volume was lowest for the week as traders were most likely eager to get home and enjoy the warm weather this weekend.
The winter strip sold off 6 cents to $3.07. Next Summer sold off 4 cents to $3.00.
Some were asking if today was profit taking after an up week and that would be a reasonable speculation. But I am watching the winter strip for the next trend and it is going sideways just at the important $3 level.
On Wednesday, I questioned the assessment that the rise in prices was because the hurricane cause producers to shut in wells. Today, I saw a line in the news that said “53% of Natural Gas production in the Gulf of Mexico was shut in the wake of Storm Francine.” That sounds horrible, eh? And if this were 2006, then yes that would be correct. But not in 2024. The buried lead was the fact that only 2% of US natural gas production comes from the Gulf of Mexico and 98% from inland shale production. Therefore, the 53% of 2% is a bit less than 1 bcf/d. Okay, 1 bcf is a lot of volume for your business but nationally, it is only 1% of US daily output.
If I have to guess, I will say today’s price action is just the normal oscillations of shoulder season.
The 8-14 day outlook is looking reasonable. The 2-week forecast for CDD is 141, much lower than last month
Have a good weekend [WFG]
