What happens in Las Vegas stays in Las Vegas they say. Today I'll be doing a little post looking at some gas market fundamentals, including weather, demand and production (supply). Since gas cannot be stored easily, except in some underground basins or sold abroad via LNG (liquefied gas), changes in temperature can have enormous effects on the spot price of gas. It is no coincidence that the front-end contract is often called "Gas Vegas" due to the strong volatility with which it is associated. A lot of traders have "burned" themselves on the gas.
Gas in Europe, and V2X (Vix for Eurozone), are now below pre Ukraine invasion (now 2y ago).
In USA, Henry Hub natural gas is re-testing the bottom at 1.60 (H24 maturity - March)
The positioning is short for speculators/traders and while it's true that: "it's impossibile that the price could go lower" ..
the curve is in a big Contango, with a very negative roll-yield which discourages investors from taking long positions
What about the "arbitrage" between US gas price and Asia/Europe gas? Below all expressed in BTU. Clearly there is a great potential of convergence (clearly taking into account the cost of shipping)
But for the moment LNG export remains between 10/12% of supply. A supply that increased a lot in the past year. With more LNG export capacity to come online in '25, there is a potential upside for gas, despite Biden wants to reduce new export licenses.
Below the US GAS production
With mild weather and above average temperature for the period
Weekly Injections are above seasonal average too (and storage higher)
As I said several times: "Energy independence + food independence = social stability"
t’s all for it. If you liked reading it and want to support my job, please share this piece to friends and colleague and subscribe to the newsletter using the link below.
I appreciate a lot your comments but I don't want to make my piece behind a payment wall, so if you want to support me I created a page on "Pay me a coffee' https://www.buymeacoffee.com/CreditMacroMicro
Great take, thank you ... glad you are back! Cheers!
Loved this broad (yet with detail) look at the NG market Thanks!