Prompt NYM natural gas has now breached $3.00, most likely en route to $3.50
June 11, 2024
Key Observations:
Yesterday the rolling prompt NYM natural gas price advanced above $3.00 per MMBtu. Positive momentum has carried over into this morning’s session. Price is already retesting yesterday’s intraday high at $3.10.
The NYM natural gas strips are now at $3.40 for the 12-month and $3.60 for the 24-month.
On our work, natural gas continues to score among the best long opportunities among all commodities (World Investors: Look Past Temporary US Gas Glut, Bottlenecked US supply creates an excellent entry point for longs in Oct-24 tenors, 17-Apr-2024).
The Oct-24 NYM futures contract (NGV4) closed at $3.03 yesterday, for a +20.7% advance from its April 17 close. We continue to expect this price to reach $3.50 before it is the M1 in autumn 2024.
Domestic demand is booming in the industrial and power sectors. Total U.S. gas demand year to date is +2.9 Bcf/d (+3.3%) higher than in the same period last year.
U.S. LNG exports are strong (13 Bcf/d) and rising into international markets that presently fetch between the equivalent of US$10.85 (TTF) and US$12.00 (Japan-Korea LNG marker).
Supply is disciplined. The U.S. gas-directed rig count (n=98, Jun 7) is the lowest since Oct-21.
Source: NYM, Bloomberg, Genscape, Baker Hughes, CFTC, Blacklight Research. Note: institutional investors typically are averse to net long positions in NYM natural gas. Collectively, they have been net short the NYM gas market in 62% of weeks since June 2006 (when CFTC data begin). In 2024, they were net short in every week through May 14, including a –3.6% position as recently as April 30. They have begrudgingly been modestly net long for three weeks, with a +0.6% position at June 4.
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