FxWirePro: U.S. Natural gas inventory preview

Natural gas is currently trading at $2.79 per MMBtu.

Key factors at play in the natural gas market –

• Gas price had moved higher as the inventories are declined fast due to polar vortex and the market is currently pricing that the storage is likely to drop to 1.24 trillion cubic feet by the end of the winter. However, as the contract shifted it is declining sharply as the end of winter nears.
• China is suffering a shortage of gas supply, which is likely to influence price over the course of next year and next.
• With natural gas turning into a buyers’ market big importers like Japan are renegotiating long-term contracts with a resale clause attached.
• 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 Gas 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 1.682 trillion cubic feet (Tcf). Stocks are 680 billion cubic feet (Bcf) lower than last year at this time and 372 Bcf 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 78 billion cubic feet against an expectation of 77 billion cubic feet drawdown. Today 58 billion cubic feet drawdown expected.
• EIA will release the inventory report at 15:30 GMT.

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