The January Natural Gas (NGF25) trading session settled at 3.213 (-0.150) [-4.46%], a high of 3.279, a low of 3.148. Cash price is at 3.366 (+0.159), while open interest for NGF25 is at 296,113. NGF25 settled below its 5 day (3.336), above its 20 day (3.186), below its 50 day (3.263), below its 100 day (3.361), below its 200 day (3.583) and below its year-to-date (3.621) moving averages.  

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Overall, the U.S. seems to be exiting this past week’s cold blast, with most of the American population set to experience “near-normal” or “above” seasonal temperatures over the next two weeks, according to most updated forecasts. Some meteorologists are forecasting a large amount of snowfall and arctic blast will hit the upper Northeast states this week.

The EIA (Energy Information Administration) reported on Friday that gas storage inventories are above average, with U.S. inventories entering this winter with the most natural gas in storage since 2016. Bloomberg reported that Spec-Traders have cut their short positions in ICE gasoil for a fourth consecutive week last week, which is the longest consecutive cut since February of this year. On Friday Reuters reported that U.S. LNG plants had near-record high demand for natural gas to the tune of 14.6 billion cubic feet, just under the all-time record set last December of 14.7 bcf. 

The Organization of Arab Petroleum Exporting Countries (OAPEC) said global exports of LNG reached a record high of 106.4 million tons in the first quarter of 2024. America remains the world's top exporter while Australia and Qatar trail behind. The United States currently exports 11.9 billion cubic feet per day of LNG, EIA data shows.

Gazprom said this morning that its natural gas flow to China has reached full capacity, a total of 38 billion cubic meters annually. Gazprom’s CEO Alexi Miller said, “We see demand for Russian gas on the growing Chinese market and the important role that Russian gas plays in the stable energy supply of China’s economy,”.  Reuters reported last week that Russian gas monopoly Gazprom is planning for 2025 with the assumption that gas transit to Europe via Ukraine will cease at the end of December of this year. This follows Ukraine's announcement this morning that it plans to terminate the current transit agreement, which has been in place for over 50 years and facilitates the flow of gas from Siberia to central Europe. However, Ukraine has expressed willingness to discuss the possibility of allowing gas transit from other suppliers through its pipeline system if requested by other European nations. Over the weekend Ukraine’s President Zelensky said he would be open to reaching a truce with Russia, while mentioning he would be open to conceding territory to Russia. This marks the first time in the two-year war that he has made such comments.

Last week Donald Trump announced on his Truth Social platform that, upon taking office, one of his first executive orders will be to impose a 25% tariff on all products imported from Mexico and Canada, as well as an additional 10% tariff on goods from China. Not yet set in stone of course, but this could drastically affect Canadian oil and natural gas imports. If this does come to pass, I think you could expect to see energy prices rise across the board. Then on this past Saturday Trump threatened the BRIC nations (Brazil, Russia, India, China, and South Africa) that if they continued to plan to move away from the Dollar that he would impose 100% tariffs on said countries. The U.S. Dollar Index closed higher by +0.62%.

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Jim Rinaudo

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