Summer temperatures arrived early in June across Texas, from the interior to the Gulf Coast, seeing the mercury reaches nearly 120°F. 

Despite the early arrival of max summer-like conditions across portions of the southern interior, temperatures have been milder from the Great Lakes moving east toward the Atlantic Coast. This, along with a more sluggish economic outlook, has kept demand in check, resulting in injections continuing to trend well above both the five-year average and last year’s levels. Inventory is up nearly 27 percent vs. a year ago. 

For now, injections remain robust, but there are reasons buyers should not be complacent. Prices that previously broke down towards $2.25 per mmBTU are finally firming in response to rising summer temperatures and falling rig counts as prices fell below breakeven for operators. LNG exports will continue to absorb much of the slack in capacity that could curb future injections. The latest Baker Hughes report shows the active natural rig count down to 130 from the peak of 163 last September, a decline of 20 percent. At this point, prices below or equal to $2.50 per mmBTU would seem to be a good value to buyers, and there is ample interest to extend coverage at or below those levels. 

The full version of this commentary appeared on our IQ platform Jun. 28, 2023. Further information, statistics, and pricing for the energy market are available to IQ subscribers.Learn more about becoming a subscriber.

Posted by: Information Services
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