Natural Gas Prices Rose Due To Increased Feedgas Flow To LNG Export Plants.
Natural gas prices surged by 4.42% to settle at 170 amid forecasts predicting increased demand for the commodity next week. This uptick in demand is partly attributed to higher feed gas flow to liquefied natural gas (LNG) export plants. Notably, US utilities injected 59 billion cubic feet (bcf) of gas into storage during the week ended April 26, exceeding market expectations and marking the fourth consecutive week of increases. Gas stocks now stand at 2,484 Bcf, significantly higher than last year and above the five-year average.
The decline in US gas production by approximately 10% in 2024, primarily due to delayed well completions and reduced drilling activities after price declines earlier in the year, has contributed to the market dynamics. Major energy firms like EQT and Chesapeake Energy have adjusted their operations in response to market conditions. LSEG reported a decrease in gas output in the Lower 48 US states, further supporting the bullish sentiment in the market. Meteorologists’ projections of warmer-than-normal weather across the Lower 48 states until May 10, followed by near-normal levels, are also influencing market sentiment.
Technically, the market is experiencing short covering, with a significant drop in open interest by -16.43% and a corresponding increase in prices by 7.2 rupees. Natural gas is currently finding support at 165.3, with a potential test of 160.6 levels. Resistance is likely to be encountered at 172.8, with a move above potentially testing 175.6 levels. Overall, the combination of demand forecasts, storage data, production trends, and weather projections will continue to shape the natural gas market in the coming days.
Natural gas demand is a complex issue with some interesting trends:
- Globally: The International Energy Agency (IEA) forecasts a rise in natural gas demand of 2.5% in 2024 [1]. This growth is driven by a few factors, including colder weather expected this year compared to 2023 and lower natural gas prices compared to record highs in 2022 [2]. However, this growth is slower than the average of 2.5% per year seen between 2017 and 2021, and mature markets like Europe and North America are expected to see a decline in demand due to a push for renewable energy sources [5].
- United States: The U.S. Energy Information Administration (EIA) reports a recent decrease in natural gas consumption (as of April 2024) likely due to warmer weather leading to less demand for heating [3]. However, the EIA also forecasts a rise in LNG exports later in 2024 as new facilities come online [4].
- Regionally: Places like India are expected to see a rise in natural gas demand in 2024, driven by growth in sectors like fertilizer, power generation, and industry [6].
Overall, the natural gas demand picture is one of both growth and decline depending on the specific region and factors like weather and policy changes.