There are a combination of national, global, fundamental, and weather-related factors impacting the natural gas market.
That’s what Frederick J. Lawrence, the ex-Independent Petroleum Association of America (IPAA) Chief Economist, told Rigzone in an exclusive interview late Monday.
“In regard to weather, there is a tropical depression forming in the Gulf of Mexico that could become a factor this week for Florida, the southeast, and energy producing regions,” Lawrence highlighted.
“U.S. market fundamentals show a market with slowing industry activity as illustrated by rig and production trends,” Lawrence added.
“U.S. gas rigs dropped one last week to 96 according to Baker Hughes. Several U.S. gas producers curtailed production earlier in the year due to fears of over-production, but the market will be closely watching the role of natural gas in U.S. electricity demand as well as LNG exports,” he continued.
“The EIA data shows a drop in U.S. natural gas production compared to last year. Storage however remains comfortable according to the latest EIA data,” he went on to state.
Lawrence also told Rigzone that, in Europe, natural gas has received a boost from “supply-related issues related to the Middle East (Israel and Hezbollah trading blows) and Ukraine (Russian natural gas supply and renewal of the gas transit deal)”.
“In addition, there was a cold snap in Europe which impacted prices despite relatively healthy inventories of 93 percent,” he said.
Stephen Schork, the Principal and Editor of the Schork Group, told Rigzone late Monday that “we are amid the typical pre-winter rally” for U.S. natural gas.
A Schork report published on September 5, which was sent to Rigzone by Schork late yesterday, stated that “there is a distinct seasonal pattern to NYMEX natural gas futures”.
“The market peaks before peak winter and troughs through peak winter,” it added.
A research note sent to Rigzone by the JPM Commodities Research team on Monday showed that J.P. Morgan expects the U.S. natural gas Henry Hub price to average $2.20 per million British thermal units (MMBtu) in the third quarter of this year, $2.75 per MMBtu in the fourth quarter, and $2.33 per MMBtu overall in 2024.
The research note highlighted that J.P. Morgan expects the commodity to average $3.70 per MMBtu in 2025.
The National Oceanic and Atmospheric Administration’s (NOAA) National Hurricane Center (NHC) is tracking two weather disturbances in the Atlantic at the time of writing.
One of these is located in the Eastern and Central Tropical Atlantic and has a 30 percent chance of cyclone formation in 48 hours, as of 2am EDT on September 24, the NHC site showed. The other is near the Gulf of Mexico and is labelled as Potential Tropical Cyclone Nine, the site revealed. As of 5am EDT, this weather disturbance had maximum sustained winds of 35 miles per hour and an eight mile per hour northwest movement, the site highlighted.
The IPAA describes itself as a national upstream trade association representing thousands of independent oil and natural gas producers and service companies across the United States. Independent producers develop 91 percent of the nation’s oil and natural gas wells, according to the IPAA, which states that these companies account for 83 percent of America’s oil production, 90 percent of its natural gas and natural gas liquids (NGL) production, and support over 4.5 million American jobs.
The Schork Group describes itself as the energy industry’s premier provider of price range forecasting and objective fundamental, quantitative, and technical analysis. It was co-founded in 2005 by Stephen Schork.
