Natural gas dropped to a three-week low on warmer weather

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Natural gas dropped to a three-week low on warmer weather
Credit: © Reuters.

Natural gas prices on the MCX dropped near a three-week low and settled at 185.90, down by -5.78%, as warmer weather and economic turmoil eased expectations of demand. Sentiments remain weak as forecasts call for less cold weather and lower demand this week than previously expected, along with an increase in gas output so far this month. The gas market has been extremely volatile in recent weeks as traders bet on the latest weather forecasts. Like all commodities, gas has also been hit by instability in the US financial sector, which has seen three banks collapse, and the hastily arranged takeover of Credit Suisse (SIX: CSGN ) by rival Swiss lender UBS. This has triggered economic uncertainty, spooking investors amid the raised prospect of a recession and falling consumption of gas and oil. Last year, natural gas prices climbed to an 800 level following a Russian supply squeeze on European gas flows. Since then, Europe’s successful topping up of supplies alongside warmer-than-expected winter weather has seen prices drop sharply, with the continent relying on US and Qatari liquefied natural gas and rationing to ease supply shortages. In the UK, blackouts were also avoided, although National Grid (LON: NG ) did have to use a coal plant earlier this month to maintain margins, and energy-saving sessions were also conducted in January. Going forward, uncertainty about gas supplies from the US will continue to drive price fluctuations. With no apparent end to the Ukraine-Russia conflict, uncertainty about weather influences, and the US supply and inventory, it seems certain that gas prices will remain volatile for the foreseeable future.

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