Natural Gas Price - June 13

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Trading Economics:

US natural gas futures edged above $3.50 per MMBtu, tracking broader gains across energy markets amid escalating tensions in the Middle East. However, the increase was more muted compared to the sharp moves seen in oil and other gas benchmarks. The geopolitical spike followed Israel’s wave of strikes against Iran. Meanwhile, US natural gas fundamentals remain relatively stable. Storage levels have improved since a colder-than-expected winter depleted inventories. According to the EIA, the week ending June 6 saw another triple-digit storage build. While inventories are 9% lower year-over-year, they remain 5.4% above the five-year seasonal average, signaling adequate supply. Still, the rapid growth in LNG exports is raising concerns about tightening supply and upward pressure on prices later this year. In addition, forecasts call for hotter-than-normal temperatures across much of the US, which could boost demand for gas-fired cooling and exacerbate pressure on inventories.

EBW Analytics Flash Report:

The July natural gas contract declined every day this week as the market repeatedly failed
to hold on to early-session gains. Over the past seven weeks, the weekly storage build
has averaged 110 Bcf—with June-to-date Henry Hub spot gas prices averaging a mere
$2.82/MMBtu as salt storage capacity fills.

Headlines of overnight strikes against Iranian nuclear capabilities sent the NYMEX front
month 13.7¢ higher before it retreated. While long-term risk premiums may eventually
rise, currently ample supply may buffer NYMEX gas futures from near-term upside.

Although another possible 100-Bcf injection could drive storage to 167 Bcf above five-year
norms, Week 3 could see a 27-CDD spike in demand due to higher LNG at Sabine Pass
and Corpus Christi. July will be much tighter than June and hot midsummer forecasts can
ignite upside, but volatility risks may rise into the end of the month.
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U.S. and Canada natural gas prices are set by regional supply/demand. War in the Middle East will have no direct impact on natural gas prices.
The North American gas markets will get much tighter in July.