Benchmark natural gas rose to the highest in two months early on Friday despite a lower than expected draw on storage and mild temperatures on expectations for higher demand following a pact between the United States and Europe to increase exports of US liquefied natural gas to the continent to replace Russian gas supply.
Gas for April delivery was last seen up US$0.15 to US$5.55 per million British thermal units.
The rise comes despite a lower than expected draw on storage last week, with the Energy Information Administration reporting on Thursday that stocks fell by 51-billion cubic feet, less than expectations for a draw of about 58-bcf. As well, the six to 10-day forecast from the National Weather Service sees seasonal or warmer temperatures for much of the eastern United States, cutting demand.
An agreement between the United States and the EU to boost LNG shipments to the continent to cut dependence on Russian gas appears to be offering support for gas, though it is unclear where the 15-billion cubic meters of additional LNG supply expected by year end will come from, since US export plants are running at capacity. However the deal may be seen as broadening US exposure to international gas markets.
“A much more oily dynamic is at play in global gas markets with the rise of geopolitics and politics, now a more prominent factor in the price discovery process. For what historically has been a highly regional market, the growth of LNG, the European energy crisis, and the Russian invasion of Ukraine have highlighted the now more global nature of gas markets and what these dynamics can mean in times of stress. While US market prices remain mostly insulated, especially on a relative basis, in our view we are learning the dynamics of a new era for gas,” RBC Capital Markets commodities strategist Christopher Louney said in a note.
Source: MT Newswires
