FxWirePro: U.S. Natural gas inventory preview

Natural gas is currently trading at $2.77 per MMBtu.

Key factors at play in the natural gas market –

• Natural gas has been struggling since it failed to clear resistance around $3 area.
• The United States and the European Union have agreed in principle in bringing U.S. LNG to Europe.
• The spread between U.S. gas prices and the rest of the world is rising again. In Japan, it reached close to $10 per MMBtu.
• However, in the United States, we expect the natural gas price to decline further towards $2.55 area.
• U.S. production is rising fast. The country is likely to become a net gas exporter by 2019.
• U.S. exit from Iran nuclear agreement complicates the future of vast natural gas reserves in Iran.
• NATO sanctions on Russia might disrupt its gas supplies to Europe.
• Russia says world’s biggest pipeline for natural gas connecting China and Russia is almost complete.
• With natural gas turning into a buyers’ market, big importers like Japan are renegotiating long-term contracts with a resale clause attached.
• Russia and the United States are set to fight for market share in Asia and in Europe. US preparing to become major natural gas exporter to the EU and Asia.
• Large Natural gas producers in the United States continue to expand production per rig. US exports are increasing significantly.
• The United States remains the largest petroleum and natural gas producers in the world.

Now, for the inventory,

According to the latest numbers, working gas in the underground storage remains at 2.249 trillion cubic feet (Tcf). Stocks are 710 Bcf less than last year at this time and 535 Bcf below the five-year average. The chart from EIA shows the level of inventory. The second chart from investing.com shows weekly changes in inventory.

• Last week, the inventory rose by 46 billion cubic feet against an expectation of 37 billion cubic feet increase. Today 39 billion cubic feet build expected.
• EIA will release the inventory report at 14:30 GMT.