U.S. Gas Futures Soar to Affect China Little

U.S. Gas Futures Soar to Affect China Little

Recently, the New York natural gas futures prices jumped to the highest point over the past four years. On November 14, 2018, the New York Mercantile Exchange (NYMEX) natural gas futures prices for December contracts closed at $4.837/mn Btu, up $0.736/mn Btu. This was the biggest daily growth rate since September 29, 2004. The U.S. gas prices are relevant to local gas supply-demand balance and the balance forecast closely. The mainly affecting factors to U.S. gas supply-demand balance are weather, inventory and output.

According to weather forecast, the U.S. temperature will be lower than that in the same period in previous years. The east U.S. will suffer continuous cold, rain and snow in the upcoming days. Half of the U.S. households use gas for the heating. So cold weather will increase the gas demand, push up U.S. gas consumption and finally support the gas market prices.

According to U.S. Energy Information Administration (EIA), up to the week ended on November 2, the U.S. gas inventory was 3,208 bn cubic feet, up 65 bn cubic feet W-O-W and down 580 bn cubic feet Y-O-Y (15.3%). This number is 621 bn cubic feet lower (down 16.2%) than the 5-year average number. Usually, the U.S. gas inventory will start to decrease in November every year. With such low inventory now, market players are worrying about that the U.S. gas inventory may hit the lowest point since 2005, and the U.S. gas futures price increased obviously.

In addition to the above market factors, there’re more and more gas export projects in U.S. Market players around the world started to pay attention to the U.S. gas market. The winter of the Northern Hemisphere is coming now, and the demand for gas in the countries here is increasing. The U.S. gas export price mainly refers to the Henry Hub futures price. Players hold optimistic predictions to U.S. gas export in the future, and such predictions support the futures prices.

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