Natural gas prices are close to a 25-year low on Thursday morning, as the summer heat has not yet arrived and excess conditions remain.
August natural gas futures fell 2% to 1.612 million barrels a day on Thursday morning, due to the lack of demand due to heat and the continued weakness of LNG.
Summer heat swept most of the Lower 48, which led to severe energy burns. But futures markets were looking for signs of extreme temperatures in order to stimulate high demand for cooling and offset the shocks of the coronavirus pandemic and the resulting global recession.
Meteorological models instead provide moderately cooler forecasts this week than forecasters predicted last weekend, as a result of which markets focused on restraining LNG problems and the effects of the general disruption in demand caused by the pandemic, despite governments lifting restrictions on business and consumers,
“After cooler trends in the last few days at the beginning of next week, the data returned a little hotter, but still with a few weather systems preventing an impressive or widespread heat,” NatGasWeather said on Tuesday afternoon in the forecast. The data also “showed a trend toward lower temperatures on the weekend of July Fourth,” when the weather systems over the eastern US were set up to prevent the upper high pressure from “becoming as strong as in previous periods.” – Reuters Commodity Desk
USA Lower 48 – 45 day degree of cooling day
An analysis of Bloomberg data by NatGas showed that gas production this week increased by more than 87 billion cubic meters. The data also showed that US oil production on June 12 reached 10.5 million barrels per day, and from June 19 it recovered to 11.0 million barrels per day. The maximum production level was reached on March 13 and amounted to 13.1 million barrels per day. The virus-related economic downturn has led to a drop in energy demand, which has led to a historic drop in oil derrick closing operations.
Regarding LNG exports, here is what Reuters said:
At the same time, LNG export levels range from 4.0 billion cubic meters. Feet per day, which is higher than recent lows, but still low, as demand for previously reliable destinations in Europe and Asia remains anemic due to the slow economic recovery and modest energy needs of the industry. The threat of a resurgence of the virus also weighs on demand. In the United States, the growth rate of Covid-19 cases accelerated in June amid a resurgent local economy, with several states, including Texas and Arizona, recording record daily highs this month, according to Johns Hopkins University.
“Although further advances in treatment and vaccines for Covid-19 may lead to additional confidence in unlocking … these are unpredictable times,” said ship broker Fearnleys AS. Thus, the mood of LNG remains “flat.”
Expectations for today’s report by the US Energy Information Administration (EIA) NatGas are likely to lead to continued builds during the week ending June 19th.
The United States Energy Information Administration (EIA) is due to release its storage report Thursday for the week ending June 19. A Bloomberg survey showed that injection estimates range from 100 to 114 billion cubic meters. A Wall Street Journal survey showed that the average expected structure was 105 Bcf, while a Reuters study by 17 analysts showed an injection range of 90 Bcf to 115 Bcf and an average of 106 Bcf. NGI rated 116 Bcf. – Reuters
To compensate for the loss of demand for coronavirus – in the United States extreme heat is needed below 48, if this does not happen – natural gas prices will continue to decline.