Released May 25, 2023 | SUGAR LAND
en
Editorial by Geoffrey Lakings for Industrial Info Resources (Sugar Land, Texas)--As we draw closer to this Summer--heading into Memorial Day weekend Stateside--it seems less and less likely that we will see a significant rebound in natty prices--which have fallen all over the world.
In fact, Greg Molnar of IEA wrote recently how global natty prices are, "looking for a floor... In Europe, TTF is now trading well within the coal-switching price range, meaning that gas-fired generation is more competitive than coal-based generation.
And both JKM and TTF fell below the oil-indexed price range, marking a significant shift in market fundamentals. "meaning that Asian players might be incentivized to return to the spot market -as part of their portfolio optimization strategies."
So I must reluctantly admit that my prognostication of being bullish global natty pricing this Summer -- as I went on record with an earlier Global Gas Market Featured content article in March -- the Calm before the Storm? -- that I expected the market & its pricing to be influenced to the upside.. will likely be shown to be unrealized.
As I even thought in my more recent Global Gas Market piece in April: Natural Gas Prices yo-yo into May prices would have rebounded to near $3 by this point; as even Greg Molnar wrote then, .."..this should give us cautious optimism ahead of the coming months, although it is too soon to set back and relax: adverse weather, unplanned outages and lower Russian piped gas flows could easily renew market tensions..."
FX Empire: Natural Gas Forecast: Prices Face Downward Pressure Amid Ample Supply, Milder Weather
Not to mention that FXEmpire, "Traders are also reacting to a potentially bearish report from the Natural Gas Supply Association."
Fortunately, IIR Energy is able to draw on the wisdom of Dr. Jan Dutton of World Climate Service who produces a long range forecast; though at the moment extreme heat is not in the proverbial cards in either the Americas or Europe.
Though there are Risk Factors to be considered which could indeed lead to a warmer and drier summer.
"Warmer and drier" possibly meaning "more fires" as well as other summer weather events that could prove to be bullish for prices.
However, this is not necessarily the case--yet--for natty in Asia.
In fact, Greg Molnar of IEA wrote recently how global natty prices are, "looking for a floor... In Europe, TTF is now trading well within the coal-switching price range, meaning that gas-fired generation is more competitive than coal-based generation.
And both JKM and TTF fell below the oil-indexed price range, marking a significant shift in market fundamentals. "meaning that Asian players might be incentivized to return to the spot market -as part of their portfolio optimization strategies."
So I must reluctantly admit that my prognostication of being bullish global natty pricing this Summer -- as I went on record with an earlier Global Gas Market Featured content article in March -- the Calm before the Storm? -- that I expected the market & its pricing to be influenced to the upside.. will likely be shown to be unrealized.
As I even thought in my more recent Global Gas Market piece in April: Natural Gas Prices yo-yo into May prices would have rebounded to near $3 by this point; as even Greg Molnar wrote then, .."..this should give us cautious optimism ahead of the coming months, although it is too soon to set back and relax: adverse weather, unplanned outages and lower Russian piped gas flows could easily renew market tensions..."
- the market made a run to push past $2.60 but ultimately failed.
FX Empire: Natural Gas Forecast: Prices Face Downward Pressure Amid Ample Supply, Milder Weather
- Forecasted increase in working natural gas driven by strong production rates and mild weather, leading to a potential oversupply. Natural gas futures are trading lower shortly after the release of the latest government storage report.
Not to mention that FXEmpire, "Traders are also reacting to a potentially bearish report from the Natural Gas Supply Association."
- Financial Post: Higher Inventories, Output to weigh on US natgas prices this summer: Ample storage levels, milder weather and a boost in production are likely to place downward pressure on US natural gas prices this summer, even as demand is seen reaching record levels, the Natural Gas Supply Association (NGSA) said on Thursday.
- FX Empire: Natural Gas Price Forecast -- Nat Gas Looks Sleepy: Natural gas markets did very little on Thursday, as we continue to sit at the 50-Day EMA. FXEmpire NatGas Tech Analysis: The natural gas market is currently in a state of uncertainty as it hovers around the 50-Day Exponential Moving Average. The market appears stagnant and indecisive, confined within a significant consolidation range. Key levels to watch are $2.00 as support and $3.00 as resistance. Traders are faced with a situation where a decision will eventually need to be made.
- BarChart story Nat-Gas Prices Climb On The Outlook For Hot U.S. Summer Temps: Above-normal temperatures are expected across the Midwest and Northeast from May 29-June 2. Also, the National Oceanic and Atmospheric Administration's (NOAA) 90-day outlook projects above-normal temperatures across most of the U.S. through August.
Fortunately, IIR Energy is able to draw on the wisdom of Dr. Jan Dutton of World Climate Service who produces a long range forecast; though at the moment extreme heat is not in the proverbial cards in either the Americas or Europe.
Though there are Risk Factors to be considered which could indeed lead to a warmer and drier summer.
"Warmer and drier" possibly meaning "more fires" as well as other summer weather events that could prove to be bullish for prices.
- Alberta fires: Reduced Canadian gas output is bullish for prices as wildfires in Alberta have halted natgas production in western Canada for several Canadian nat-gas producers. The total number of wildfires in Alberta stood at 71 Tuesday afternoon, with 20 still considered out of control. However, that is down from 93 fires last Friday, with cooler temperatures and rain expected to provide further relief in the days ahead.
- IIR News: Wildfires Cause Oil & Gas Shutdowns in Alberta, an Industrial Info Weather Impact Update:Researched by Industrial Info Resources (Sugar Land, Texas)--The areas of Fox Creek and Grand in Alberta, which are home to major light oil and gas production regions, have been evacuated due to massive wildfires in the area. The evacuations have caused shutdowns of drilling and production as well as operations at several natural gas processing plants.
The current fires are unlike the wildfires of 2016, which in northeastern Alberta surrounding the Fort McMurray area and caused the shutdown of more than 1 million barrels per day of oil sands production. The current fires are impacting production from formations such as the Clearwater, the Duvernay and the prolific Montney. Operations at over a dozen companies have been impacted due to the recent wildfires.
However, this is not necessarily the case--yet--for natty in Asia.
- Natural gas prices in Asia fall to pre-Ukraine war levels on China shift: Beijing buys more LNG long-term contracts as it seeks energy stability.
A benchmark for natural gas prices in Asia has dropped to levels last seen before Russia's February 2022 invasion of Ukraine as China, one of the world's biggest consumers of the fuel, changes its buying patterns.
The Refinitiv-calculated spot price for liquefied natural gas in Asia dipped to $9.80 per million British thermal units on Friday, falling below $10 for the first time since May 2021. The price is down about 90% since hitting the $70 range last summer.
Similar declines have been seen in European gas futures. Dutch TTF next-month delivery prices touched 29.75 euros ($32) per megawatt-hour on Thursday, slipping below 30 euros for the first time in almost two years. China has helped drive this reversal with changes to its gas procurement.
One of these changes has been a partial shift in supplies from Australia to Russia, whose gas has become cheaper owing to the risk of Western sanctions. China reduced LNG imports from Australia by 30% in 2022 while boosting gas imports from Russia by more than 40% that year, including LNG and gas by pipelines.
ET: EnergyWorld: Global LNG markets to remain tight till 2026
Though, with World Climate Service we can see there is the portent of a warm summer which could drive demand in Asia.
Though Risk Factors exist which might mitigate this warmth.
So Natty is very depressed at the moment and could be so through the Summer season.. However, there could be surprises--brought on by one Mr. Heat Miser--in store as indicated by the World Climate Service.
Therefore, let IIR Energy's Dedicated Market Research place the world at your fingertips. Tomorrow's News Today. Ask us! We have Answers!
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