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MCX Natural gas claimed new high and settled lower last week

Natural gas prices on MCX futures market scaled new record high in previous week and retreated lower on demand destruction with volatile moves in tandem with US gas markets after a fire explosion in an US LNG export facility, which going to restrict some of the country’s overseas shipments this summer. However the natural gas prices across Europe remained at elevated levels last week on fear of lower supplies from US which further putting pressure on already tight European markets in the wake of Russia’s invasion of Ukraine.

Explosion in Freeport LNG facility shut activity for 3-Weeks

The United States is the world’s largest supplier of LNG and Freeport LNG facility cover up to 18% of these exports, the facility on Quintana Island will be closed for three weeks after the explosion and Europe will be the most effected region. According to data compiled by ICIS, 80 per cent of Freeport LNG’s cargoes went to Euro region in March. When the facility was functioning at its full capacity, it consumed about 2 billion cubic feet of gas per day, or about 2 percent of total U.S. output. Apart from the unprecedented event, the fundamentals of natural gas remain support for prices on expectation of hotter weather and related cooling demand this week. While low wind power and solid power demand in Texas continue to cushion the prices as well. Meanwhile global market sentiments continued to grapple with the supply dynamics of gas from Russian on Ukraine invasion. Whereas Euro bloc taking all its efforts to reduce its dependency on Russian imports.

U.S. natural gas production and demand will rise in 2022-EIA

U.S. natural gas production and demand will both rise in 2022 as the economy grows, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO). EIA projected that dry gas production will rise to 96.50 billion cubic feet per day (bcfd) in 2022 and 101.57 bcfd in 2023 from a record 93.55 bcfd in 2021. while the statistical agency also projected gas consumption would rise from 82.98 in 2021 to 85.33 bcfd in 2022 before sliding to 85.15 bcfd in 2023. That compares with a record 85.29 bcfd in 2019

U.S. working gas inventory increased by 97 Bcf in its latest report

US Energy Information Administration reported an infusion of 97 Bcf in the week ended June 03. The recent increase lifted storage level to 1,999 Bcf.

NYMEX: If prices are unable to beak the stiff support of $7.50 there are more potential upside. A direct break below the same is a short term bearish signal.

In MCX, positive outlook likely to continue while the support of Rs 620 holds the downside. However, Consistent trades below the same would trigger selling pressure.

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