Natural Gas Futures Reduce with Accelerating Exports and Increasing Supplies

Houston, USA- With Russia capping the Natural Gas exports to Europe and limiting the capacity of the Nord Stream 1 pipeline to 20%, resulted in the prices soaring over the past few months. However, a noticeable increase in coal consumption drove lower demand for Natural Gas in the previous week.

On the supply side, the production level in the United States has climbed above 98Bcf/day, outpacing the August expectation on the back of Haynesville shale production. Natural Gas futures skidded lower with the NYMEX contract was off by 13 cents to USD 7.988/MMBtu.

When we focus on the trading market, exports from West Texas have increased, connecting pipelines in the Central and Southwestern region of Mexico. The healthy demand for Natural Gas in the United States leads to exports from Mexico.

When observed on 3rd August, the Henry Hub spot prices fell from USD 8.68 per MMBtu to USD 7.83 per MMBtu. Ethane prices also fell following Natural Gas prices in the Houston Ship Channel, narrowing the ethane to Natural Gas spread.

Azerbaijan, the North Sea, and Northern Africa are also sending Natural Gas to Europe to fulfil the downstream MTBE and Formaldehyde market requirements. The United States also supports Europe by transshipping more Liquefied Natural Gas (LNG) by ships than Russia does by pipeline.

According to ChemAnalyst, the price of Natural Gas in the global market will remain tepid with healthy market purchasing in the regional market. The surging production rate among the manufacturing plants will decrease the prices of Natural Gas in the forthcoming weeks. The drop in Gas future will be due to seasonal changes as traders are now ahead to September supply-demand fundamentals instead of August. Spot prices of Natural Gas in the global market will also oscillate with disruption in supply/demand fundamentals. However, the storage inventories will remain high, and tepid purchasing esteem will further support the price trend.