Oil prices have meanwhile shed their mid-week gains again. Brent is trading at $57 per barrel and WTI at $47 per barrel. The still high oversupply, the record-high US stocks, the ongoing overhang of speculative long positions and the firm US dollar point to further falling oil prices.
The US natural gas price fell by 3% yesterday to $2.7 per mmBtu and is thus once again nearing the lows it recorded in early February. The fact that the price dropped despite a more pronounced inventory reduction than anticipated is cause for concern.
According to the US Department of Energy, US natural gas stocks declined by 198 billion cubic feet last week - a decrease of 189 billion cubic feet had been expected. Indeed the five-year average figure for the corresponding reporting week is just 116 billion cubic feet. After three weeks of above-average reductions, US natural gas stocks meanwhile again find themselves 13% below the five-year average, after having briefly exceeded this level in mid-February.
Commerzbank notes....
- Apart from a brief surge to above $3 per mmBtu, however, this has done nothing to help the price. After all, we are nearing the end of the heating season, meaning that this is likely to have been the last week of any sizeable inventory reduction in the current season. What is more, the restocking phase will begin at a considerably higher level than last year.
- We therefore see only limited upside potential for the natural gas prices and envisage an average price of $3 per mmBtu in 2015.
