Natural Gas Prices Fall by 5% as Traders Look to U.S. Inventories Report
Natural Gas, Commodities, Oil, President Biden – Talking Points
- Natural gas futures fall sharply on increased Euro supply, Russia-Ukraine tension
- President Joe Biden pledged to continue fighting against higher energy costs
- China rumored to saturate European market with fresh supply of natural gas
Natural gas prices retreated sharply on Wednesday as U.S. traders positioned themselves ahead of Thursday’s eagerly awaited inventories report. The current street consensus is predicting a 173 Bcf (billion cubic feet) draw from U.S. stockpiles, as cold weather batters the Midwest and the Northeastern sections of the United States. Wednesday’s decline saw natural gas futures close below the key 200-day moving average, potentially hinting at more pain for LNG (liquid natural gas) in the days ahead. However, price was able to hold above the key psychological $4.00 level, which could act as near-term support and fend off any potential drops.
Despite the cooldown of natural gas prices throughout the second half of 2021, energy prices remain top of mind for politicians in Washington. In a press conference on Wednesday, President Joe Biden reaffirmed his commitment to getting more oil supply to the market. This comes as WTI and Brent crude continue to power higher above $85/bbl.
Despite a relatively mild winter, risks remain for LNG. Bouts of colder weather and a relatively tight supply could exacerbate any price increases over the coming weeks. Global LNG prices also face significant pressure from the ongoing situation in Eastern Europe. The Nord Stream 2 Pipeline continues to be the center of attention, with many Western nations hinting at blocking completion of the project should Vladimir Putin elect to invade Ukraine.
Natural Gas Futures Daily Chart
Chart created with TradingView
European natural gas prices retreated Wednesday as well, as rumors spread that supply from China could saturate the markets in the near-term. European LNG futures fell by as much as 8.6% as Sinopec is rumored to be willing to sell numerous cargoes of LNG. Fresh supply for Europe could help alleviate growing price pressures across the continent, as prices more than tripled for some consumers in 2021. Overall sentiment in the space remains weak, with geopolitical tensions and the prospects of increased global supply weighing on price.
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--- Written by Brendan Fagan, Intern
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