Natural Gas Plunges as Severe Cold Affects US Production

Natural gas plummeted as severe weather conditions persisted, offsetting the US production and stockpile.

In the Asian afternoon session, natural gas futures ending in April declined by -1.49% to $1.86 per million British thermal units (MMBtu).

Meanwhile, extreme cold conditions pose difficulties and advantages within the US natural gas market, impacting supply, demand, pricing, and operational logistics.

Moreover, traders and investors must vigilantly track weather forecasts and market conditions to mitigate risks and promptly seize opportunities.

However, an analyst observed that attempts by producers to reduce production are offering specific support. Although there was a temporary pause in January caused by Arctic frost, gas production continues to be at unprecedented levels.

Moreover, the Energy Information Administration’s (EIA) recent report reveals that mild weather conditions have exceeded the average in storage levels, with a 22.30% surplus.

Meanwhile, despite the almost 4.00% rally in Wednesday’s session, market enthusiasts are looking closely for a possible increase in the European gas trading market.

Furthermore, the bloc’s gas trading market is attracting numerous foreign traders, particularly from Asia, as prices hit multi-year lows, leading to increased activity in purchasing contracts.

According to reports, China’s natural gas imports are anticipated to surge 8.20% this year as purchasers buy the commodity, especially with low prices. In contrast, Turkey’s natural gas imports declined by -8.00% last year, with Russia being the largest supplier.

US Natural Gas Futures Success Amid Low Production

Natural gas futures increase with the transition to April, as there is anticipation that reduced US production might counterbalance the absence of support from demand driven by weather.

Dennis Kissler from BOK Financial suggests that the notion of a potential peak in natural gas production has attracted bargain-hunting buyers to the market.

Kissler added that despite the adverse impact of elevated production and milder temperatures on demand, natural gas futures exhibit resilience, refraining from trading below the $1.60 range.

Analysts predicted that on Thursday, the EIA would likely announce a withdrawal of 91 billion cubic feet (bcf) from underground storage, resulting in total stocks reaching 2,379 bcf, which is below the average.