Today´s topic is Natural Gas, and much like oil, its future will depend on the transition to alternative energy resources as the world strive to cope with global emission reductions and reduce global warming.
Natural Gas fell to an historic low in Februar, according to EIA. As we noted in our blog report last week the oil inventories has been increasing and this is also true for natural gas. According to our source the natural gas inventories are now 22% higher than the last 5-year average. High production levels and low consumption is leading to stocking supplies. If this may indicate a short-term turning point, as consumers and producers may turn around and start stocking up cheap gas, is difficult to predict. High interest rates put a damper on global economics and overall production is expected to reduce. From a seasonal perspective the northern hemisphere is entering its sunny season and indicating continued negative price sentiment from a short term perspective as the need for heating is reduced.
It may be too early to conclude that EU has finalised its transition from Russian gas after the surge from 2021 when Russia initiated its bullying phase prior the Ukraine Invasion. This caused a surge in import of LNG. This season the freight rates have dropped below $50.000US, 40% lower than February 23, according to LNGPRIME. From a consumer perspective the electricity and energy prices may be lower for the short-term. This is positive for suppliers as it will be reducing the additional margin pressure arising from the high interest environment for global producers.
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