Natural Gas View: (22-1-20)
NYMEX natural gas trades marginally higher near $1.9/mmBtu after a sharp 5.4% decline in previous session when price tested the lowest level since April 2016. Natural gas has been on a downward path for last few days and sell-off extended after price dipped below the key $2/mmBtu levels. Weighing on gas price is subdued demand expectations as weather forecasts are pointing to milder weather in early February which could limit heating demand. Also weighing on price is expectations of another smaller than average decline in US gas stocks.
As per early Bloomberg estimates, US EIA weekly report is expected to note an 87 Bcf decline in US gas stocks as against 5-year average decline of 194 Bcf for this time of the year. Natural gas has fallen sharply and while overall sentiment is still negative some caution is required as most of the negative factors have already been factored in. Focus may continue to be on US weather and trend in energy prices.