Natural Gas Inventories Rise

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Natural Gas Inventories Rise

Natural Gas Inventories Rise Amid Cooling Demand

Easing tensions in the Middle East was a good development for the Natural Gas market. After all, 20% of the global oil supply goes through the Strait of Hormuz, and blocking that route would have sent the prices higher.

In addition, the US gas supplies are sitting at a comfortable level and are actually higher than what's normal for this time of the year.

Natural Gas Demand Weakens Over Weather

According to experts, the warm weather in the USA has lowered the demand for natural Gas. That's why the natural gas prices have slipped below $4.00.

The latest data from EIA also shows a rise in the gas inventories as of late. According to them, that's a 7% increase from the average value over the last 5 years.

Also, the weather conditions in the US states show that summer is in full swing. The warmer weather, along with a strong supply, has also affected the natural gas prices.

People are utilizing less natural gas as a result of warmer weather, which reduces demand. In addition to stable or increasing storage levels, there is no justification for pricing to remain higher than $4 per MMBtu.

Going forward, the natural gas markets will keep a close eye on the inventory levels in the USA. But once the firms start to stockpile gas for winter, the prices will start to jump higher.

The natural gas prices from Henry Hub are also trading under $4.00 handle while more sellers are waiting near the $3.15. So, there's a good chance that the natural gas prices in the USA may even drop below the $3.50 support.

In the long term, the key level for natural gas will be $2.90, under the $3.00 support. A break of these levels would lead to strong buying of the natural gas as the firms will start to stock up for winter.

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