Gas Comparative Inventory

The market has re-priced natural gas to a yield curve with about a $1.00 lower mid-cycle price than has described price-volume relationships since the Ukraine invasion.

Markets continue to discount gas as the price fell below $2.50 for the first time since early April 2021. Forecasts suggest normal to warmer-than-normal temperatures through the middle of February.

Forecasts suggest a cooler early February so I expect prices to increase somewhat. I suspect that price will remain discounted by at least 10% below the implied clearing price of $3.80.

U.S. LNG exports increased 600 mmcf/d to 12.3 bcf/d and Mexico exports rose 500 mmcf/d to 5.4 bcf/d.

LNG exports have returned to levels before the Freeport LNG outage so analysts can’t blame that for more-than-adequate supply.

Markets are signaling natural gas producers to slow their drilling because supply is more than adequate.

Gas markets are more over-supplied than they have been in 2.5 years and that the over-supply is increasing for now. That is hardly a bullish signal for gas prices.