• FxWirePro: U.S. natural gas inventory preview

    Source: FxWire Pro - Commentary / 16 Aug 2018 06:53:34   America/New_York

    Natural gas is currently trading at $2.93 per MMBtu.

    Key factors at play in the natural gas market –

    • Natural gas is heading higher again to retest the $3 area after finding support around $2.7 area.
    • The United States and the European Union have agreed in principle in bringing U.S. LNG to Europe.
    • Gas price remains high, globally, especially in Japan. However, in the United States, we expect the natural gas price to decline further towards $2.55 area, largely due to the existing bottlenecks in global trade. Russia and the United States are set to fight for market share in Asia and in Europe. US preparing to become major natural gas exporter to the EU and Asia. Large Natural gas producers in the United States continue to expand production per rig. US exports are increasing significantly. The United States remains the largest petroleum and natural gas producers in the world.
    • U.S. production is rising fast. Currently, U.S. is the third biggest exporter of natural gas.
    • U.S. exit from Iran nuclear agreement complicates the future of vast natural gas reserves in Iran.
    • NATO sanctions on Russia might disrupt its gas supplies to Europe.
    • Russia is likely to dominate the Chinese gas market.
    • With natural gas turning into a buyers’ market, big importers like Japan are renegotiating long-term contracts with a resale clause attached.

    Now, for the inventory,

    According to the latest numbers, working gas in the underground storage remains at 2.354 trillion cubic feet (Tcf). Stocks are 671 Bcf less than last year at this time and 572 Bcf below the five-year average. The chart from EIA shows the level of inventory. The second chart from investing.com shows weekly changes in inventory.

    • Last week, the inventory rose by 46 billion cubic feet against an expectation of 49 billion cubic feet increase. Today 31 billion cubic feet build expected.
    • EIA will release the inventory report at 14:30 GMT.

     

     

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