Natural Gas Dropped Amid A Massive Oversupply Of Gas In Storage.
Natural gas prices edged slightly lower yesterday, settling down by -0.07% at 146.8, reflecting a market grappling with a significant oversupply situation. Despite this, the downside remained limited as forecasts hinted at cooler weather ahead, promising increased demand for the commodity next week. Additionally, the surge in gas flowing to LNG export plants, including Freeport LNG, provided some support to prices. The oversupply narrative was underscored by data from the U.S. EIA, revealing a substantial addition of 50 billion cubic feet (bcf) of gas into storage during the week ended April 12.
Natural Gas
Notably, US gas production has declined by approximately 10% in 2024, with key energy firms like EQT and Chesapeake Energy delaying well completions and scaling back drilling activities. The decline in gas output in the Lower 48 US states, dropping to a preliminary three-month low of 95.8 bcfd on Thursday, reflected the concerted efforts of energy firms to manage the oversupply situation. However, meteorological projections of near-normal weather through April 26, followed by a warmer-than-normal period from April 27 to May 3, may present challenges in rebalancing supply and demand dynamics in the near term.
From a technical perspective, the market witnessed long liquidation as open interest dropped by -13.09% to settle at 43384, coinciding with a slight decrease in prices. Support levels are identified at 143.8, with a potential downside target at 140.8, while resistance is expected at 150.3, with a breakout potentially testing 153.8. This technical overview highlights the ongoing struggle between oversupply concerns and weather-related demand dynamics, guiding market participants in navigating price movements in the natural gas market.
That’s right, natural gas prices dipped slightly yesterday due to a glut of gas in storage facilities [Natural Gas Futures News]. Here’s a quick rundown of the situation:
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Oversupply: There’s currently a significant amount of natural gas stored in the US, which is driving prices down. This is likely due to a combination of factors, including:
- Reduced demand: Perhaps due to milder weather or a shift towards other energy sources, demand for natural gas might be lower than anticipated.
- Lower production: The news mentions US gas production has declined in 2024, possibly due to companies cutbacks on drilling activities.
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Limited price drop: Even with the oversupply, the price decrease was minimal (around 0.07%). This suggests other factors might be at play, such as:
- Anticipation of higher demand: Forecasts for cooler weather could be prompting some to buy natural gas in expectation of increased demand next week.
- Increased exports: The news also mentions a rise in gas flowing to LNG export plants, which could be providing some support to prices.
Overall, the natural gas market seems to be in a bit of a tug-of-war between the oversupply and other counterbalancing factors. It’ll be interesting to see how things develop in the coming weeks.