TMN - Natural gas

Natural Gas Prices Declined amid Solid Output

On Friday, natural gas prices dropped due to more vital production brought by record amounts of fuel being drilled from the ground.

Natural gas futures for June delivery decreased by -0.77% to $2.07 per million British thermal units on May 05.

Warmer seasonal weather slashed heating demand as gas flows to export plants dropped for spring maintenance. According to analysts, the US output went up to 101.70 billion cubic feet per day (bcfd) in May. It is higher than the 101.40 bcfd in April.

Moreover, meteorologists expect the weather in the Lower 48 states would change. It would go from colder than average to warmer from May 06 to 17.

Furthermore, natural gas stockpiles in Northwest Europe are hitting a 60.00% capacity. For its five-year, the amount of fuel in the inventories is about 57.00%, based on experts. Therefore, it is an immense amount of stored gas compared to inventories in the US.

In addition, at the Dutch Title Transfer Facility, natural gas was trading at a 21-month low. It equates to $12.00 per MMBtu.

Meanwhile, a US oil and gas company mentioned decreasing gas drilling in the Permian Basin amid lower prices. It would trim $100.00 million off its budget and plans to return to its Alpine High development when markets improve.

EU Might Continue Repressing Natural Gas Demand

In March, the EU had an extension of its voluntary natural gas demand reduction target. It aimed to protect itself from Russia’s attempts to weaponize energy.

Based on experts, the reduction targets do not make market sense anymore and might risk more distortions in the markets.

Furthermore, they have a new regulation covering the year to March 2024. It would set a 15.00% demand decrease target linked to the average of April 2017 to March 2023.

Also, the council confirmed that overall EU natural gas usage fell by 19.30% from August 2022 to January 2023. They added that the decline in demand would allow for filling its storage, lower prices, and more energy supply security.

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