Bearish Weather Continues, Although Lighter Production Reducing Build Size Estimates

May 22, 2023: June’23 nat gas prices were higher early Friday, then sold off to close 1¢ lower after the Baker-Hughes rigs report showed no change in US gas rigs. However, prices ended sharply higher on the week due to the prior B-H rigs report showing a massive plunge in gas rigs by 16, that was seemingly confirmed by last Thursday’s bullish EIA storage report miss that implied production was lighter than the nat gas markets were led to believe. Where production is reported this week will be of great interest to see if pipeline flow data better picks up on a decline in production. This week’s EIA storage report will also be closely watched to see if a tighter balance carries over to a second week, although we also must consider part of the reason why estimates for this week’s build have plunged is due very light wind energy generation last week. While production appears to be lower than what’s been stated, LNG exports remain soft at only near 12.5 Bcf/day. In addition, weather patterns remain bearish as widespread heat still isn’t expected into the US until after the first week of June. But what was once looking like a lengthy string of 100+ Bcf builds, due to lighter production last week’s and this week’s are likely to remain under 100 Bcf.