Are there signs of a recovery in gas prices?
Natural Gas Futures - Jun 2024 U.S. reached a one-week high at $2.06/MMBtu in anticipation of increased demand.
This is due to an increase in the amount of gas used at the Freeport LNG export facility in Texas. On Monday, the amount of gas used reached its highest value in three weeks, 12.9 bcfd compared to 12.2 bcfd the previous day.
This suggests that at least one of the three liquefaction trains is back in operation after a period of interruption.
The natural gas injection season has just begun.
The annual gas storage process is divided into two distinct phases: gas injection into the reservoir, which takes place during the spring and summer (April 1 to October 31), followed by delivery during the fall and winter (November 1 to March 31 of the following year).
Gas producers have recently turned off the taps on major extraction fields, leading to a decrease in production. This could have a significant impact on the future of the gas industry and energy markets in general.
To achieve a sustainable recovery in gas prices, there needs to be a gas deficit. This means that demand exceeds supply and there is a shortage of gas in the market.
Only under these circumstances will we be able to see an increase in gas prices in the long term.
At the moment, a deficit storage situation is unlikely to occur by November.
However, as is often the case in the natural gas market, prices and weather conditions will have a significant impact on storage demand. With the upcoming summer likely to be warmer than usual, we expect demand for electricity to increase.
This year has been difficult for the gas industry, but there are hopes for a return to normalcy by the end of the year.
If producers continue on the path of reducing production, we are likely to fall back into a balanced storage scenario.
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