Natural gas thwarted by record U.S. production

The Natural

The natural gas market was edging higher on colder weather forecasts but was thwarted by a historic announcement. The Energy Information Administration gave pause to natural gas bulls when it reported that U.S. gross natural gas production hit a record high 73.54 billion cubic feet a day in October. That was up 0.4% from the month of September that was also upwardly revised and more than the market expected.  Now, when you couple that with the fact that more pipelines are coming online to get that increased gas production into Henry Hub, the longer-term expectations for end of season storage has to start rising. So in other words it will be hard to keep gas strong as it is clear that production is on an upward trajectory despite the weakness in price.

The colder temperatures did support oil that was being weighed down by an anticipated rebound in supply. Heating oil led the way and RBOB received support by reports of a Bayway Flaring incident. The market was also moved by stock market gyrations, which mean that earnings could impact the price of oil. Technically crude still looks to move higher. Of course the “gas-oil” and natural gas market seems to be the strongest as cold weather in Europe and China are supporting prices. Reuters reports that  British gas for immediate delivery rose to a near two-week high on Monday morning as forecasts of cold weather and rising industrial consumption after the  extended holiday period boosted demand outlooks.  

Daily average temperatures were expected to drop to below 2 degrees Celsius by early next week, down from around 10 degrees Celsius forecast for Tuesday. Cooler weather was expected to boost gas-fired heating demand.

In Asia, distillate and jet fuel margins are at one-week highs as kerosene demand from Japan continued to be strong on a colder than anticipated  winter. Still the gasoil market, on the other hand, has been adequately supplied with more spot barrels seen coming out from India and Taiwan.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


Comments
comments powered by Disqus