US gas price heats up amid commodity boom

2024-04-10
Summary:

US gas prices rose Wednesday, buoyed by recovery signs in Europe and Asia and robust US growth, extending this month's rally with other commodities.

The benchmark US gas price gained on Wednesday, extending its rally this month along with other commodities, due to signs of business activity recovery in Europe and Asia and of US robust growth.

Still they were already down roughly 20% so far. A warmer-than-normal winter has dampened demand for heating in key LNG consuming countries after an upsurge in investment in the sector.


The US, which is the largest exporter of LNG in the world, reported its warmest winter on record and similarly Europe logged its second warmest winter temperature on record.


More than 150 million tonnes per annum worth of LNG capacity is currently under construction, marking a “record wave of expansion,” Morgan Stanley said. That will exacerbate oversupply worldwide.


US natural gas will be cheaper to burn than coal in 2024 for the first time ever, the EIA said in its Short-Term Energy Outlook on Tuesday. The consumption of coal has been waning due to more CO₂ emissions.


According to its latest forecast, spot gas prices at the Henry Hub benchmark in Louisiana will average just $2.15/mmbtu this year, well below $2.54/mmbtu in 2023. But it also implies further rally from the current level.

XNGUSD

The gas price, well supported by its 50 SMA, is looking to retest the high of $2.0744 hit in 5 March. A breach of the resistance area could bolster the case for a trend reversal in the medium term, though it seems hard given fundamentals.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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