Natural Gas down as Demand Remains Low

The major contributing factor to the 2.44% drop in natural gas process for Monday is a lack of demand, say experts.

Natural gas prices are down to $1.767 after almost climbing to $2.00 in the last few days. That price point will be tough for the commodity to overcome, though, so long as the weather stays warm and the demand is low. Most countries have ample natural gas and need little more for now, with usage at the low end for the year as we head into spring and then summer.

As weather continues to warm, natural gas prices will continue to drop, because demand will decrease further. We don’t expect the price to move much above $2, even if economic factors are working in the favor of natural gas prices.

Many major natural gas providers still have plenty of gas in storage, meaning that they may be motivated to sell lower as the warm weather drags on. Some export challenges are making that situation worse, particularly the outage experienced by the Freeport LNG facility in Texas. Because of the situation there, gas to export plants is being halted in the area.

Economic Factors to Watch

US economic factors will be especially important for natural gas pricing, as will geopolitical factors in the Middle East. As the US dollar moves and as US inflation moves, the natural gas prices will respond. Continued fighting between Hamas and Israel will make the war over natural gas mor intense and possibly cause prices to increase, if tensions worsen.

Keep an eye out for further news from major eastern powers regarding sanctions against western countries. At the moment, the UK and Russia have sanctions against one another over oil and gas because of the Russian invasion of Ukraine. Continued hostilities there will take the price of gas higher. Those tensions will mean that the UK may have to look for gas suppliers outside of its normal markets, and if the situation drags on or worsens, the overabundance of natural gas might not be such an issue.