Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access all of our platforms from a single Saxo account.
Natural gas rebounds from key support ahead of stocks report
Ole Hansen
Head of Commodity Strategy
Summary: Following another winter of volatile price action, natural gas has returned to, and is once again trying to establish support ahead of, the key $2.5/MMBtu level. Here are some potential catalysts for a rise in prices.
Following another winter of volatile price action natural gas has returned to, and is once again trying to establish support ahead of, the key $2.5/MMBtu level. The high volatility witnessed this winter will begin to ease as we enter the more predictable spring period. This also means that we will soon be entering the annual injection into storage season when supply once again exceeds demand.
However, we still have a few weeks left before that happens and the late February/early March weather can still spring a few surprises. Please note that throughout these past few winter months, natural gas has often spiked higher or lower on Mondays when short-term weather forecasts were being updated over the weekend.
However, we still have a few weeks left before that happens and the late February/early March weather can still spring a few surprises. Please note that throughout these past few winter months, natural gas has often spiked higher or lower on Mondays when short-term weather forecasts were being updated over the weekend.
Natural gas production, demand and (LNG) exports are all hovering at or near record highs. In order for gas to recover, we need to see one or more of the following:
1) Colder than normal late winter/early spring weather driving stronger than expected demand.
2) Slowing production growth, especially as a byproduct from shale oil production (possible but unlikely to provide any immediate support).
3) Increased LNG exports (unlikely in the short-term due to an overhang of supply and low prices in both Europe and Asia following a milder than normal winter).
Natural gas (NGH9) is trading higher by 1.25% today ahead of the weekly inventory report from the US Energy Information Administration at 15:30 GMT. A Bloomberg survey points to a weekly stockpile draw of 165 billion cubic feet (bcf), well above last week’s draw of just 78 bcf and also higher than the five-year average of 148 bcf.
According to the US National Oceanic and Atmospheric Administration, the short-term weather outlook points to colder than normal temperatures through to March 26.
1) Colder than normal late winter/early spring weather driving stronger than expected demand.
2) Slowing production growth, especially as a byproduct from shale oil production (possible but unlikely to provide any immediate support).
3) Increased LNG exports (unlikely in the short-term due to an overhang of supply and low prices in both Europe and Asia following a milder than normal winter).
Natural gas (NGH9) is trading higher by 1.25% today ahead of the weekly inventory report from the US Energy Information Administration at 15:30 GMT. A Bloomberg survey points to a weekly stockpile draw of 165 billion cubic feet (bcf), well above last week’s draw of just 78 bcf and also higher than the five-year average of 148 bcf.
According to the US National Oceanic and Atmospheric Administration, the short-term weather outlook points to colder than normal temperatures through to March 26.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.