Natural gas prices took an uptrend on Thursday’s trading session after production failed to hold recent highs.
The US NGAS futures edged up 3.08% to $8.46 per metric million British thermal units. Likewise, European contracts increased more than 6.00%, pushing prices above €200.00 per megawatt hour.
Accordingly, natural gas traders had gained some confidence after output plunged by 2.00 Bcf day/day amid maintenance activities. In line with this, projections showed that the production could fail at 96.00 Bcf per day.
Meanwhile, the EU’s gas storage is nearly 73.00% full as of Wednesday. This report represented a hike of 10.00% over the past 30 days. Correspondingly, this upturn is despite the heavily reduced flows from Russia via the Nord Stream 1 Pipeline.
Nevertheless, the bloc still faces a potential energy crisis, especially if the continent sees a colder-than-average winter. This conflict supported the current buying position of natural gas prices.
Moreover, a drop in the Rhine river’s water level poses the latest threat to the energy supply. The channel is a crucial waterway for Germany to transport goods and commodities, including coal.
Thus, a reduction in coal shipments may force Berlin to burn more natural gas to meet its energy needs. This prospect could slow the progress in building winter stockpiles.
Local officials already warned that water levels could drop to a critical point soon. Correspondingly, NGAS prices may rise over the next week if much-needed rain will not make any appearance.
Natural gas traders await EIA report
Furthermore, natural gas traders focus on the release of the storage report of the Energy of Information Administration today. They look for further hints following a bigger-than-expected gas storage build in the last period.
Specifically, analysts anticipated the federal result to show a 39.00 Bcf injection for the week ending August 5. This figure will represent a decline from the prior 41.00 Bcf injection.
Overall, the total US natural gas inventory is 336.00 Bcf below the five-year average. Correspondingly, given the already tight market, a downbeat reading could support further price gains.