NATURAL GAS EDGES UP ON HIGHER DEMAND EXPECTATIONS

Natural Gas is up 0.90% as gas demand from Pakistan is expected to pick up.

The US Dollar strengthens, though it faces headwinds from other central bank decisions on Thursday.

US Natural Gas prices are in an ascending trend line formation and could break above $3.

Natural Gas prices are grinding higher again in a choppy week with several positive and negative headlines guiding gas prices. The biggest headline on Thursday is Pakistan hitting gas markets in search of LNG as its domestic gas production dwindles. If this trend persists, Pakistan’s demand could triple in five years.

The US Dollar (USD) gained strength as the US Federal Reserve (Fed) delivered what was expected: a hawkish pause. The devil was in the details in the Dot Plot, in which the Fed is anticipated to hold rates  above 5% for the most part of 2024. In the previous forecast, the Dot Plot showed rates between 4.5% and 5%. This surprise jacked up the 2-year US Treasury yield,  which peaked at a 16-year high at 5.1973%. The news fuelled a rally in the Greenback.

Natural Gas is trading at $2.955 per MMBtu at the time of writing.  

Natural Gas news and market movers

The Energy Information Administration (EIA) is set to deliver the weekly gas storage changes at 14:30 GMT. Another build is expected from 57 billion to 67 billion. 

China is set to launch new LNG Futures contracts later this year. The proposed sizes per contract will be 20 tons and limits are in place with a maximum of 8% fluctuations from the previous day’s settlement. China is seeking more influence in the gas market by setting Asian gas prices. 

The demand side could be in for a big newcomer to the market as Pakistan sees its local gas production slowing down from 6 billion cubic feet per day to  3.8 billion cubic feet. Local demand is expected to remain unchanged, so Pakistan will need to buy its gas abroad. This  means that Pakistan could triple its demand on the market in the coming five years.

The Norwegian Troll Fields supply is coming back online after repeated and prolonged delays. 

Germany is due to hold tests on Thursday to see if it would be able to make it through the winter in case of gas shortages. 

Headlines suggest that Chevron and the unions are nearing a deal to end local shutdowns in Australia. . Chevron Union workers are expected to follow the recommendations from the Fair Work Commission, the country’s workplace relations tribunal.