Well, that was unexpected. The front-month October 2021 contract surged a massive 35 cents or +7.6% on Wednesday to settle at $4.91/MMBTU, after briefly topping $5.00/MMBTU intra-session. The close was the highest since February 25, 2014—back during the infamous “Polar Vortex Winter” when storage deficits topped -1000 BCF—and the highest September close since September 30, 2008 in the waning days of the commodities bubble. As the Figure to the right shows, the December 2021, January 2022, and February 2022 contracts are all above $5.00/MMBTU, a remarkable turn around for the commodity that has been in a persistent bear market for the better part of 3 years. Why did prices spike? Once again, it was likely a combination of factors. LNG feedgas demand jumped back above 11 BCF/day in Tuesday’s pipeline data. Gulf Of Mexico production remains more than 70% shut-in while Louisiana power outages have dropped under 300,000 customers, narrowing powerburn and industrial demand losses …
- Mark NRG