Market Overview

Natural gas prices continue to gain momentum in April. May TTF Gas Futures rose from  lows of 39.79 Euros per MW to 51.37 Euros on April 3. Natural Gas is regaining its role as a primary fuel source for manufacturing since its prices dropped to an attractive level. Rising demand in Asia and China, in particular, largely contributed to the upside.

Prices received additional traction after some members of the Organisation of Petroleum Exporting countries announced additional production cuts of 1.65 million barrels per day on top of the previously agreed cut of 2 million bpd, which will start in May and last until the end of 2023. This decision boosted the Brent crude prices benchmark above $85 per barrel, targeting $90 per barrel. In this sense gas became even more attractive as alternate fuel.

The gas prices rally may continue throughout the coming months, supported by the above-mentioned drivers. Fears over declining gas supplies from Russia and due to a dry summer may contribute to the rising prices. Goldman Sachs and SEB AB analysts warn that prices may rise by double the amount before the end of the gas reserves replenishment season is over. Gas reserves in Europe were recorded to be filled by 56% on March 29, and this is the highest level for this date in more than a decade. Thus, gas prices are less prone to rise compared to crude.

Oil inventories in the United States, Purchasing Managers’ Index (PMI) readings in China and Non-Farm Payrolls report this Friday will become important milestones for gas prices this week. Gas prices are likely to fluctuate between 41.5 Euros to 53 Euros per MW this week. If the resistance at 53 Euros is broken, prices may continue to move up towards 55 Euros per MW.

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Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.