Global Institute of Trading

LNG & Natural Gas

The US and European Union (EU) formed a joint task force on 25 March, with the sole objective of reducing the EU’s dependency on Russian natural gas. US LNG exports will be pivotal in realizing this strategy, with the EU seeking to import an additional 15Bcm in 2022 and ensure additional demand of 50Bcm per year at least until 2030.

ASNOC L&S

On 12 April, ADNOC L&S said in a statement it signed a shipbuilding contract for the construction of two new LNG vessels. According to the company, this purchase is to further reinforce its position as the UAE’s leading shipping and maritime operator. it is also a part of the company’s broader expansion strategy. 

Therefore, the new LNG vessels are to be enablers of ADNOC’s 2030 growth strategy, supporting its existing LNG business as well as its ambitions to grow its LNG production capacity.

The Jiangnan Shipyard in China will build the LNG vessels.

In 2020, ADNOC L&S started a strategic growth program to expand and diversify its shipping fleet. Its trading fleet transports crude oil, refined products, dry bulk, containerized cargo, LPG, and LNG to global markets through its owned and chartered vessels. 

source: offshore energy biz

US natural gas spikes to the highest level since 2008 with elevated volatility set to become entrenched

Notwithstanding the relative calm in European gas (TTF) markets, US gas (Henry Hub) markets are in a state of flux. US Henry Hub prices have climbed to the highest level since 2008, breaking through USD8/MMBtu intraday on 18 April. Though thismight appear related to the Ukraine war, US gas fundamentals have remained broadly disconnected from the conflict, with US gas markets instead predominantly driven by below-normal spring temperatures, tighter fundamentals, surging LNG exports, sliding storage, low liquidity and high coal prices.

With US LNG exports currently at capacity, it will likely take years before Europe’s efforts to boost LNG imports results in added US export demand, even with the recent US-EU agreement. Hence, the near-term impact of the Ukraine war on US gas markets is largely limited to its support to Appalachia coal prices, which has increased the risk premium embedded in US gas prices.

Tighter inventories and stronger LNG exports haveraised expectations for higher US gas prices, with the futures calendar strip morethan doubling from a year ago. This in-turn will raise already elevated power pricesand further fuel US inflationary pressures. Looking ahead, markets have likelyovershot with eventual milder weather in the spring with a boost in inventories puttinga brake on the rally. However, we expect higher marginal production costs as well ashigher volatility to become a more common attribute of US gas markets, accentuating the importance of strategic hedging from both consumers and producers.

Source: MUFG

Natrual Gas follows above $7mmbtu

US cash prices for next-day flows of natural gas climbed sharply higher on April 18, with many locations trading above $7/MMBtu for the first time since the February 2021 freeze, even as demand is set to weaken over the next week.

The physical market’s buoyancy follows a dramatic recent rally in NYMEX Henry Hub futures, as high prices and rail constraints inhibit the kind of gas-to-coal switching in power generation that could help temper a gas price rally.

On April 18, NYMEX Henry Hub May contract gained 52 cents to reach $7.82/MMBtu, $2.10 higher than at the start of the month, according to preliminary settlement data from CME Group. The prompt-month contract has repeatedly smashed multiyear records dating back to 2008, with the most recent trading session marking the highest point reached since September 23, 2008. The bullishness extended along the curve, with the June–November contracts flirting with $8/MMBtu and December coming in at $8.24/MMBtu on April 18.

Spot gas prices in every region of the US similarly rallied above $7/MMBtu in April 18 trading, with locations seeing gains ranging from 45-85 cents. While S&P Global Commodity Insights projected that total US gas demand will increase 1.8 Bcf, or 2%, to 97.2 Bcf on April 19, demand is expected to slide just over 8 Bcf/d to average 89.1 Bcf/d over the next seven days and down to 87.4 Bcf/d for the week after next. US gas production remains lethargic, averaging 93.4 Bcf/d so far this month, down 400 MMcf/d from March levels.

Where could XNG/USD head to?

With EU and the rest of the world wanting to pull away from Russia Natural Gas (Russia is the second larged producer of gas) this could dramatically effect the future price of gas. Causing less supply and more demand will ultimetly drive prices higher in the future.  Where price sits now on XNG/USD is around $7.7. However, I won’t be surprised if we can see $9 by the end of the month. We continue to look for buying opportunities on the pull backs. 

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