Recent government inventory reports have reflected some tightening in the natural gas market, but with production near recent highs and storage surpluses set to grow in the coming weeks, the outlook for the energy sector has become increasingly bleak. The price of natural gas has contracted by a third in the current year and is down 75% from its 2022 peak due to an unusually warm winter followed by an equally warm autumn.[0]
The UK-based Barclays bank has further worsened the situation by announcing that it will no longer provide financing for oil sands companies or oil sands projects.[0] Analysts from Wall Street to Bay Street are now slashing the outlooks for companies in the Canadian energy sector that were previously expected to resist a sharp, double-digit earnings downturn.[1]
On Monday, the benchmark March gas contract on the New York Mercantile Exchange’s Henry Hub settled at $2.405 per million British thermal units (MMBTU), down 10.9 cents from Friday’s close.[2] The April futures dropped 10.8 cents to settle at $2 The market saw a slight recovery by the end of the week, with the March Nymex contract settling at $2.514 per MMBTU, an increase of about 8.4 cents from Thursday’s close.[2] The April futures dropped 11.5 cents to reach $2.607
This week saw a rise in gas prices due to an increase in feed volumes at Freeport LNG, a Texas-based liquefied natural gas export terminal. It had halted operations after a fire broke out at the plant in June, but is now gradually returning to normal.[3] This week, Freeport, which used to be able to handle 2 billion cubic feet of gas per day, received a maximum of 0.7 bcf daily – a mere 30% of its original capacity.[3]
However, with only a handful of days of intimidating cold over the next couple of weeks, the market is likely to look for clues as to whether the background state of the market is tightening.[4] It is expected that natural gas will go down in its upcoming trading if the 3.098 resistance level is maintained, and even more so if it breaks the support level at 2.432 and goes for the 2.00 support level.[2]
Are you prepared to engage in Natural Gas Forex trading?[3] Below is a compilation of some of the top commodity trading brokers to consider.[2]
0. “Drop In Gas Prices Weighs On Outlook For Canadian Drillers” OilPrice.com, 15 Feb. 2023, https://oilprice.com/Energy/Energy-General/Drop-In-Gas-Prices-Weighs-On-Outlook-For-Canadian-Drillers.html
1. “Energy outlook in Canada darkens as natural gas prices collapse” Financial Post, 14 Feb. 2023, https://financialpost.com/commodities/energy/oil-gas/canada-energy-outlook-sours-natural-gas-prices-collapse
2. “Natural Gas Technical Analysis: The Price is Range Bound” DailyForex.com, 13 Feb. 2023, https://www.dailyforex.com/forex-technical-analysis/2023/02/natural-gas-technical-analysis-13-january-2023/191366
3. “Natural Gas: Bulls and Bears Play ‘Hide-and-Seek’ at Mid-$2” Investing.com India, 16 Feb. 2023, https://in.investing.com/analysis/natural-gas-bulls-and-bears-play-hideandseek-at-mid2-200566286
4. “Natural Gas Futures, Most Cash Prices Slip on Near-Term Warmth” Natural Gas Intelligence, 14 Feb. 2023, https://www.naturalgasintel.com/natural-gas-futures-most-cash-prices-slip-on-near-term-warmth