Natural Gas Futures in United States Continue to Rise on Ceasefire Hopes

Quick overview

On Wednesday, U.S. gas futures jumped 1.54% to $2.74 per MMBtu thanks to an announcement out of the White House that an indefinite ceasefire has been reached with Iran.

LNG rates are higher today than they have been in weeks after President Trump posted that the ceasefire with Iran would be extended “until such time as their proposal is submitted and discussions are concluded.” That indefinite ceasefire also comes with a stipulation that the Strait of Hormuz will remain blockaded for now.

News of the ceasefire affected international oil and gas prices even more, and Brent crude oil rose by 3% while West Texas Intermediate (WTI) futures jumped by 2.88% Wednesday. Brent crude is now up to $101 per barrel, while WTI climbed to $92 per barrel.

Demand Expected to Increase for Domestic LNG

Monday saw the price of LNG hit a one-week high, and then Tuesday saw a climb to a two-week high. Now, with another increase for the domestic market price of natural gas, investors should be aware of the factors influencing the rate.

The weather forecasts for may are starting to come in and are showing temperatures that are cooler than anticipated. While previous forecasts called for climbing temperatures, it appears that there will be some cooler weather for a short period in May, causing demand to increase.

Currently, supplies of natural gas in the United States are above their five-year average thanks to recent large injections. Demand has plummeted after weeks of warm weather and high production, but we could see a temporary shift in the coming weeks.

The price of LNG ticked upward Wednesday as the market anticipated higher demand in the coming weeks. Output has dropped slightly but inflows for local export gas plants are close to their all-time high. Meanwhile, Middle East tensions remain high, and there is still the risk that oil fields and oil tankers could be destroyed if fighting breaks out again, creating a global demand that requires U.S. LNG inventories to meet the need.

These factors are pushing and pulling on LNG rates in the United States, creating a slightly higher price level than what we have seen over the last couple weeks. For now, we anticipate some stability in Iran thanks to the extended ceasefire and slightly higher LNG rates as cool weather forecasts set the tone for the market.

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Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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