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Natural Gas

Natural gas prices surged to more than 7-month high last week.…..

US NYMEX gas futures advanced more than 6 percent in the previous week on expectations of shortage of supply and increased US exports.

Henry hub front month natural gas futures prices closed higher by 6.43 percent in previous week after testing the highest levels since early November 2020 on weekend session bullish trades, a high of $3.33 per mmBtu. Back home, here in domestic futures platform MCX Natural Gas futures were also in a bullish trend by achieving 71.15 percent and lastly settled at Rs 242.8 per mmBtu.

U.S. Natural gas possibly to continue its upward trajectory move ..

* Expectation of intense heat in California and US west this week continue to push prices higher.

* Supply issues from Appalachia (one of the world’s biggest producing region in US)

* Anticipation of warm weather patters for the for the next two weeks likely to support prices further.

Natural gas exports and natural gas for electricity in US reached record highs in 2020(EIA) In 2020, both natural gas consumption by the U.S. electric power sector and natural gas exports reached record highs, despite a 2 percent annual decline in domestic dry natural gas production. Dry natural gas production doesn’t include natural gas plant liquids (NGPL), such as ethane and propane. In 2020, NGPL production grew to a record-high 2.7 trillion cubic feet, up 7 percent from 2019.

Robust US exports to Asia, Europe and Mexico... Natural gas demand remained steady on depletion of European gas storage over a freezing winter. While a speedy pandemic demand recovery in Asian region further supported the sentiments. Elsewhere, as economic growth in North America with hopes of another hot summer possibly to drive demand and prices, where US pipeline export to Mexico is poised to record levels, a record high of 2.0 trillion ft3 in 2020.

U.S. Natural Gas storage increased in previous week.. The US natural gas storage industry posted addition in its latest report. The storage fields added just above the five-year average for the second consecutive week by an increase of 98 Bcf. Stocks were 383 Bcf less than last year at this time and 55 Bcf below the five-year average of 2,466 Bcf. At 2,411 Bcf, total working gas is within the five-year historical range.

NYMEX: A direct break above $3.4 would extend the bullish outlook in the near future. Meanwhile, an unexpected drop below 2.8 is a signal of reversal. In MCX, prices required to break Rs 250 to trigger major bullish rallies. Else, expect a choppy trading in the immediate run.

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