Natural Gas Prices Jump Friday
Natural gas futures rose as well as WTI crude after Middle East fighting de-escalated and the market started a return to normalcy.
Quick overview
- Natural gas futures ended a 5-day losing streak with a 5% increase, reaching $3.7/MMBtu.
- WTI crude oil prices rose to $66, marking three consecutive days of gains despite a significant weekly loss.
- Summer demand for oil is expected to rise due to increased usage for generators and air conditioning amid a heat wave.
- Louisiana has reclassified natural gas as green energy, joining three other states in this designation.
The 5-day losing streak for natural gas futures has come to a close thanks to price increases Friday that brought the cost up to $3.7/MMBtu, an increase of 5%.
WTI crude climbed up to $66 on Friday marking the third trading session in a row they have increased. However, the overall loss for the week could be substantial, rivalling losses as far back as March of 2023. At the same time, US natural gas futures gained nearly 5%.
The market has been particularly volatile this week, with a range of $15 per barrel that was exacerbated by conflict in the Middle East. Now that peace has been achieved between Israel and Iran for now, gas prices are recovering and losing some of their instability. As fears over oil shortages subside, all signals point to de-escalation.
Summer Oil Needs Increase Demand
As summer begins, the global demand for oil is on the rise. Heating needs abated during the spring, but the expectation of very hot temperatures this summer should increase oil demands to power generators and air conditioners and to fuel summer vacations. Increased transportation needs during the summer months should help the market get back on its feet after Middle East fighting created a minor oil crisis.
A recent heat wave in Maine and Pennsylvania has dramatically increased gas usage, with these areas experiencing some of their hottest temperatures on record. India is also going through an extremely hot period and will call on natural gas reserves to compensate. We anticipate the demand to increase for natural gas during this season while supply issues improve.
The past ten weeks have seen additions to gas storage hitting higher numbers than normal, but that extra gas is expected to be used quickly during this exceptionally hot summer. Investors should expect stabilization in the gas prices and a return to normalcy for a while as Middle East tensions settle down.
Natural Gas Now Considered Green Energy
Louisiana joins a growing number of U.S. states that have reclassified natural gas as green energy. Louisiana’s Republican governor Jeff Landry signed the law this week in solidarity with President Donald Trump and his efforts to promote natural gas, oil, and coal. Louisiana is now the fourth state to reclassify natural gas in this way, preceded by Tennessee, Ohio, and Iowa- all states with Republican governors.
The European Union recently classified nuclear power and natural gas as sustainable energy sources. They are under fire from Greenpeace for this move, but there is a growing consensus to treat natural gas as safe, sustainable, and environmentally friendly.
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