FxWirePro: U.S. Natural gas inventory preview

Natural gas is currently trading at $2.99 per MMBtu.

Key factors at play in natural gas market –

• Natural gas drawdown season has begun with net withdrawal last week.
• Winter this year is expected to be warm thanks to El Nino effect.
• Japanese importers are reportedly diversifying sources. Japan is in focus of producers as many long-term contracts are set to expire by the end of the decade. Japan is set to begin importing US LNG this year. Japan’s Kansai energy will import 1.2 million tons of US LNG for next 20 years. Japanese plants are already enjoying a buyer’s market and renegotiation is helping them to resale natural gas.
• Russia and the United States are set to fight for market share in Asia and in Europe. US preparing to become major natural gas exporter to the EU and Asia.
• Lithuania imported first-ever LNG cargo from the United States.
• Australia looking to beat Qatar to become world’s largest Ngas supplier.
• EIA reports that the US is set to become a net exporter of natural gas in 2017.
• Large Natural gas producers in the United States continue to expand production per rig. US exports are increasing significantly.
• Qatar announced that it plans to increase output by 30 percent, which could be trouble for the US as Qatar is a low-cost producer.
• The United States remains the largest petroleum and natural gas producers in the world.

Now, for the inventory,

According to the latest numbers, working gas in the underground storage remains at 3.772 trillion cubic feet. Stocks are 180 Billion cubic feet less than last year at this time and 41 Billion cubic feet below the five-year average. The chart from EIA shows the level of inventory. The second chart from investing.com shows weekly changes in inventory.

• Last week, the inventory declined by 18 billion cubic feet against an expectation of 15 billion cubic feet drawdown. Today 51 billion cubic feet decrease expected.
• EIA will release the inventory report at 17:00 GMT.

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