Wedoany.com Report-Mar 12, In an EBW Analytics Group report sent to Rigzone on Tuesday by the EBW Analytics Group team, Eli Rubin, an energy analyst at the company, highlighted that U.S. natural gas posted its fifth gain in six sessions on Monday.
Eli Rubin, an energy analyst at EBW Analytics Group, highlighted that U.S. natural gas posted its fifth gain in six sessions on Monday.
“The April natural gas contract pulled back 41.0¢ from Sunday evening’s spike but still closed 9.2¢ higher yesterday for a fifth gain in six trading sessions,” Rubin said in the report.
“Technically, however, yesterday’s shooting star pattern may be indicative of a deeper retest of support,” Rubin warned.
“A rapidly warming March forecast suggests that the injection season may already be getting underway in coming days, with net injections throughout the back half of March suggesting a net injection for the month for only the second time,” Rubin added in the report.
“LNG feedgas demand and gas production readings are lower this morning, although LNG may face a more structural seasonal decline over the next 30-45 days,” Rubin continued.
The EBW Analytics Group analyst went on to state in the report that, “even as fundamentals tilt increasingly bearish … bullish momentum is sustaining further price gains”.
“Natural gas prices remain at the base of the price-inelastic portion of the demand curve. As highlighted Sunday evening, rapid and substantial price increases cannot be ruled out,” Rubin added.
When Rigzone asked Phil Flynn, a senior market analyst at the PRICE Futures Group, why the U.S. natural gas price was rising on Monday in an exclusive interview yesterday, Flynn told Rigzone that natural gas “exploded in an epic short squeeze as traders started to get concerned not only about the fact that inventories are a lot lower than anybody thought they would be at this time of year, but for the forecast of a hotter than normal summer, coupled with threats from Canada over sanctions and the potential building of a new pipeline”.
“Natural gas seemed to get concerned when the former Canadian Prime Minister suggested that they could put in more tariffs on products to the United States and natural gas and start to build a pipeline to avert the United States and just sell their natural gas elsewhere,” Flynn added.
“While the market reacted to that, it’s really a long-term issue and not one that really will happen overnight. At the end of the day Canada’s best customer is the United States,” he continued.
“My expectations are that we’re starting to see … the repricing of the natural gas market from the depressed prices that we’ve seen for the last couple of years,” Flynn went on to note.
Flynn told Rigzone that “there has been a complacency in the natural gas market that has been built up because of prolific U.S. production and the inability to expediate the approvals of natural gas plants”.
He added that “that’s all changing” and said “the markets seemed to realize that” on Sunday night.
When Rigzone asked Frederick J. Lawrence, the ex-Independent Petroleum Association of America (IPAA) Chief Economist, why the U.S. natural gas price was rising on Monday in a separate exclusive interview yesterday, Lawrence told Rigzone that “natural gas prices ignored warmer weather trends over the weekend to gain strength on the longer-term forward outlook”.
“This outlook for natural gas includes lower than normal storage, higher than average power generation, and LNG export trends, in addition to new friction from trade wars,” he added.
“Natural gas exports from Canada to the U.S. have dropped from 9.8 billion cubic feet per day (bcfpd) to 8.2 bcfpd according to reports. Storage dropped 80 billion cubic feet last week which was relatively bearish due to mild weather but overall storage remains low - almost 25 percent below year-ago levels and down 11.3 percent from the five-year average,” he continued.
“The market continues to anticipate higher national natural gas demand in the years ahead due to increased electricity draw in addition to higher levels of exports. Continued discussions about the addition of data centers also supports longer-term natural gas growth,” he went on to state.
Lawrence told Rigzone that producers have begun to react, “adding natural gas rigs while adopting a more conservative stance on oil-directed drilling”.
“Baker Hughes shows that the natural gas rig count added three rigs, including one in the Haynesville,” he highlighted.
