TMN - Natural gas

Natural Gas futures rebound after June plunge

On Friday, natural gas prices slightly recovered after slipping yesterday, following the better-than-expected EIA supply report.

The US NGAS futures ticked 3.01% or 0.17 points higher to $5.67 per metric million British thermal units. The recovery came after the previous slump of 16.53% to $5.42 MMBtu. In June, the contract ended 33.00% lower, marking the worst month since December 2018.

On Thursday, the US Energy Information Administration reported that inventory for the week of June 24 increased by 82.00 billion cubic feet. The result notably came in higher than the analysts’ consensus of 76.00 billion cubic feet.

Moreover, part of this month’s weakness is also due to the shutdown of the Freeport LNG facility. Accordingly, the site’s operation accounts for roughly 17.00% of the LNG processing capacity in the United States.

The announcement of fire caused natural gas futures to slump more than 16.00% on the day as traders feared an oversupplied market.

Despite June’s heavy declines, natural gas has surged 40.00% since the start of the year. Last May, NGAS prices rocketed above $9.00 per MMBtu in May, marking the highest level since August 2008.

Natural gas prices to rally in July

Meanwhile, the natural gas prices could set an uptrend in the following weeks. The group of seven (G7) countries reversed course this week regarding investment in natural gas. Eventually, they declared their support for investments in new LNG production.

Previously, the European Union had to reconsider its stance regarding fossil fuels as it struggles to secure energy. The change in stance will lead to long-term demand for LNG, likely pushing a sustained rally in natural gas prices.

Another bullish factor for the US NGAS contracts is the anticipated extreme conditions in the region.Weather models have maintained a hot pattern over most of the southern two-thirds of the United States. Subsequently, experts projected temperature peaks forecast in the 90F to lower 100F.

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