Natural gas prices are starting to look exciting to bulls.
That’s what Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone in an exclusive interview on Tuesday when asked why the U.S. natural gas price is rising today.
“If you would have asked many natural gas traders a few months ago where inventories would be, hardly any of them would have predicted that supplies in the U.S. would be as low as … [they are] now,” Flynn said.
“Add to that the swing demand in Europe and the expectations that we’re going to see not only an increase in LNG exports in the coming months but also predictions of a hot in dry summer, all of a sudden natural gas prices are starting to look exciting to bulls and we haven’t seen that for a long time,” he added.
“In fact, hedge funds are now embracing the long side of natural gas, which is almost like a change in religion from where they were,” Flynn continued.
When asked the same question in a separate exclusive interview on Tuesday, Art Hogan, Chief Market Strategist at B. Riley Wealth, told Rigzone that natural gas demand in the Lower 48 states is projected to be higher than previously anticipated despite milder weather expected through March 18.
“Also, stockpiles remain about 12 percent below the five-year average due to earlier extreme cold,” he added.
“U.S. gas output hit a fresh record of 104.7 billion cubic feet per day in February. On top of that, there were record flows to liquefied natural gas (LNG) export plants last month, as Germany continues to seek energy independence from Moscow,” he continued.
In another exclusive interview today, Frederick J. Lawrence, the ex-Independent Petroleum Association of America (IPAA) Chief Economist, told Rigzone that natural gas prices have begun the week on a positive note due to bullish structural fundamentals.
“Unlike oil, which has been more negatively impacted by the onset of tariffs in North America and OPEC potentially increasing supply in April, the macro market outlook for natural gas has remained positive,” Lawrence said.
“Widening storage deficits in the U.S. and in Europe will create more urgency to summer refill,” he added.
“A continuation of chilly weather in the eastern U.S. joined by other national weather systems featuring strong winds and lower temperatures has kept weather a factor going into early March,” Lawrence went on to state.
Jim Krane, a Research Fellow at Rice University’s Baker Institute, told Rigzone in a separate exclusive interview on Tuesday that prices are a bit more sensitive now because so much gas in storage was burned up to keep Americans warm during the cold snap.
“So the bigger number for U.S. LNG exports bleeds into prices because it arrives before storage levels recovered,” he added.
In an EBW Analytics Group report sent to Rigzone on Tuesday by the EBW Analytics Group team, Eli Rubin, an energy analyst at the company, said “the April natural gas contract skyrocketed yesterday morning as weather forecasts added back heating demand”, adding that “the magnitude of the 28.8¢ gain far outstrips the fundamental gain in weather-driven demand”.
“Instead, while macro news headlines of U.S. tariffs on Canada and OPEC+ returning oil supply are both supportive for U.S. natural gas, financial flows appear to have vastly amplified the move higher,” Rubin stated in the report.
“Technically, Monday’s surge sets up further gains that could retest or exceed recent April contract highs at $4.205 per million British thermal units (MMBtu),” Rubin went on to note.
