It ‘s no surprise to see both oil and natural gas prices end higher for the month of February as frigid temperatures in the country’ s largest energy production state in Texas caused a temporary decline , but natural gas has pulled back sharply and is likely to see further losses in the coming month.
The extreme cold covering most of the central and eastern U.S. in mid-February was the main reason for the rise in natural gas prices this month, Christin said. Redmond, product, energy services and sustainability analyst at Schneider Electric.
The weather provided “an awful mix of skyrocketing demand for heating and freezing in major production basins,” she said, noting the wonder where ice forms in the cold temperatures and blocks pipes.
On February 17, NGJ21 natural gas contract for the first month,
NG00,
settled at $ 3.219 per million British thermal units, the highest level since November 2020, according to Dow Jones Market Data.
In Friday’s deal, April’s natural gas contract fell 5.2 cents, or 1.9%, at $ 2.725 per million British thermal units, but was still heading for a monthly climb of more than 5%.
Winter storms were certainly picking up demand over time, and a “lump in prices may encourage a return to growth projects for gas-led exploration and production companies, most of which are very good. cost costs to the bone over the past year as suffering prices, ”said Stewart Glickman, energy equality analyst at CFRA Research.
February’s climb for natural gas prices, however, will stop compared to February’s rise in oil prices. The future of Texas West Intermediate CLJ21,
CL.1,
has seen a monthly climb of nearly 20%.
Raw has been able to sustain many of its benefits, even as yield outages associated with winter storms have eased. Much of the crude rally is linked to supply cuts from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, and hopes linked to the release of COVID-19, factors that are “ongoing,” said Redmond.
Read: Here is what the oil market thinks OPEC + should do next
Breaks for natural gas are “almost back to normal, with a mid-temperature forecast for March giving an additional bearish” for prices, Redmond said.
Energy producers have been recovering from the mid-February frost and demand for liquefied natural gas (LNG) from Asia has also withdrawn.
“Major oil and gas producers in the most weather-affected region – Texas and Oklahoma – have been told that production was out for up to four to five days, but is fully recovering next. a week or so, if it is not already done, ”said Peter McNally, global divisional director for industry, materials and energy at Third Bridge.
At the same time, U.S. exports had “effectively doubled” between September and December last year, he said, but the latest data show that LNG exports have “Stop starting in early February,” due to declining demand, especially in Asia.
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“The bottom line is that we are at the tail end of the season the highest demand for natural gas,” and the “best demand is in the rear view mirror. ”
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And seasonally, the market sees investments rise in April as a moderate temperature that will typically be in spring heat and power demand, McNally said.
“The bottom line is that we are at the tail end of the season with the highest demand for natural gas,” and “the best demand is in the rearview mirror,” he said.