Natural gas prices are starting to see some relief, after settling below $4.00 per MMBtu for the first time in two weeks. The September contract continues to hover near the $3.90 per MMBtu level, after settling as high as $4.158, since moving into the prompt position. The August contract rolled off the board at $4.044 per MMBtu. Natural gas prices have not settled that high since November 2018, when the December 2019 contract settled at $4.715 per MMBtu. Weather, production, and natural gas exports continue to be leading factors in price volatility returning to the natural gas market. This week’s natural gas storage report from the U.S. Energy Information Administration (EIA) provided some bearish pressure on pricing, as the storage injection of 46 Bcf came in above market expectations and historical averages for the same reporting week. As we move closer towards the end of summer and temperatures turn milder and more comfortable, the market is expecting larger storage injections and fewer market factors to continue pushing natural gas prices much higher. Natural gas production remains higher than 2020 and is expected to increase further in 2022; however, natural gas exports continue to rise and off-set this increased production. Between January 2021 and June 2021, U.S. LNG (liquefied natural gas) exports increased 42% year-over-year, with Asia being the primary purchaser. With global demand increasing, especially in the near-term, the tighter supply/demand balance will continue to have a greater impact on natural gas prices.
