By Timothy S. Snyder, Matador Economics

Natural-gas inventories fall. Again. We’re watching geopolitics drive price direction in the energy complex on Friday. But inventory data is supporting natural gas prices in the U.S.

Yesterday’s Energy Information Administration weekly natural gas storage report showed another week of declining natural gas inventories. We started this year at 3373 billion cubic feet (bcf) in storage and yesterday’s report showed we have 2101 bcf. We started the year paying $3.633 and today it’s $4.152.

Tighter supplies squeeze prices higher. One certainly hopes we don’t have another extremely hot summer!
Hopefully, today’s Baker Hughes Rig Count will start to show more drilling action for natural gas and oil soon!

The European Union announced it will purchase more U.S. liquefied natural gas (LNG) and increase its renewables exposure to replace Russian natural gas. It’s a developing story, and it shows the opportunities for U.S. LNG is growing exponentially as we move to exit winter and into spring.

In an opposite sort of news direction, there is a story in Oilprice.com from Julieanne Geiger titled “Russia Dangles Arctic Oil to Lure Back U.S. Firms.” The caveat is that Russia will do business with the U.S. if the political winds shift. That’s a big if, but it represents what is possible for powering the world if we turn back the geopolitical clock to the 1990’s. It’s a tall order, doable, but a tall order.

There is a whole lot of change that needs to take place before this can even be considered, but it shows the world needs us to balance our energy needs. There needs to be a ceasefire first between Russia and Ukraine, then the situation in the Middle East has to end. China’s imperialistic desires need to tone down, and the U.S. needs to stop the yo-yo program for managing our policy issues. We can’t lead in this world if every four years, “we call the other guy’s baby ugly”!

Of course, we should expect to see prices rise, and that they have. When President Trump left office in 2021, the price of natural gas was $2.491 million cubic feet (MMCF). Yesterday’s close was $4.152 MMCF. That’s nearly double and shows the entrenchment of the inflation that was worked into our economy over the last four years. Granted, its nice for royalty payments, but the consumer gets to pay the bill!

U.S. winter weather

While the cold begins to wane in Texas, temps are still below normal, but there is hope for warmth next week across the south, while another front dips into the Northwest from Canada.

Market drivers for today

• Russia wants geopolitics to settle and start working with U.S. Exploration and Production companies.
• Temperatures will begin to moderate and bring us out of the freezer.
• Natural gas inventories continue to drop, prices are higher.

More energy commentary is available at www.matadoreconomics.com