Natural gas prices under pressure on higher output and weak demand
economictimes.indiatimes.comNatural gas prices remain under pressure weighed down by record production, high inventory levels, and worries over industrial and heating demand.
Prices at the key NYMEX futures platform currently traded at a one-month low. However, it has been broadly choppy inside the $3.6 — 2 MMBtu levels throughout this year.
A similar volatile price action has been witnessed in the domestic futures and the European markets as well. A complex interplay of supply and demand dynamics largely affected the outlook of the fuel.
The United States is the largest producer of natural gas and the output from the country has been rising in the over the years.
US gas output is currently higher than the five-year average. In 2022, US gas production grew by 3.6 percent to a new all-time high of 94.7 billion cubic feet per day.
Gas prices are highly poised to seasonal fluctuations.
Storage and consumption volumes exhibit seasonal patterns on a regular basis due to high price elasticity. And gas inventory levels at the end of this refill season in the US stood at the second-highest level in the past five years. Higher-than-normal inventories at the start of the refill season resulted in less natural gas net injections compared with previous years as well.
Forecast of milder weather conditions across most of the US also dampened the sentiment. Colder temperature particularly in winter increases the heating needs and boost the demand for natural gas in the country.
In addition to the US markets, European markets also reported increased inventory levels.
