CRAK - The Bottom Is In For Natural Gas
2024-03-07 07:15:00 ET
Summary
- The past few months have seen natural gas prices hammered on the back of robust production and a seasonally warm winter in the United States.
- As it stands, following recent production cuts by several major producers in response to lower prices, this headwind looks to have been solved, though the bearish weather problem remains for now.
- On the bullish side, a return of La Niña mid-year in addition to the ongoing build-out of LNG export capacity could see strong demand for much of 2024.
- But, how far prices can rally depends on the supply response to higher prices by producers, in addition to how quickly the excess storage levels are worked though, the latter of which will cap prices in the short term.
No longer bearish, but not bullish either
After being sold relentlessly throughout almost the entirety of the US winter months, natural gas prices look to have finally found a bottom. The front-month futures contract briefly bottomed out around the $1.4-$1.5 MMBtu mark in late February, and has since rallied to around $1.9 MMBtu. US natural gas is now the cheapest primary energy source on the planet....
The Bottom Is In For Natural Gas