Natural Gas Approaches Fresh Lows in Europe: Could US Prices Follow Suit?
Recent days in northern Europe have been marked by an onslaught of winter with negative temperatures, leading to a rise in natural gas consumption.
Despite this, the Dutch TTF Natural Gas Futures bears are once again trying to break below the support at 30 euro per MMBtu with a good chance of going lower.
This down move could potentially open the way for an attack on last year's lows, which are in the range of 20 euro per MMBtu.
With the increasing attacks by the Yemeni armed group Huti on the Red Sea, there was a real threat of disruption to the supply chain leading through this route.
However, the intervention of the international coalition led by the US has relatively stabilized the situation and removed supply pressure.
The most likely scenario for the next few months is a continuation of declines, which could be disrupted mainly by political events such as the possible spillover of the Middle East conflict and Iran's involvement in hostilities.
Despite the declines in gas prices in Europe and Asia, in the United States we can observe a different direction when analyzing the pricing of the commodity based on Henry Hub contracts.
Over the past month, quotations have risen from $2.24 to more than $3 setting local maximums.
The reason for the recent increases is a combination of increased demand during the heating season along with a decline in inventories.
Analysts say inventories could reach 117 billion cubic feet in the first week of January, dropping to 3359 Bcf in underground storage.
In the longer term, supply pressures may subside because, despite declines in storage levels, inventories remain above the average of the past five years.
As a result of the shale revolution, the U.S. has become self-sufficient in
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