As the world’s top investment manager and financial market journalist, I am here to provide you with the latest insights on the US natural gas market. According to a recent research note from UBS, temporary disruptions at export terminals and increased production have led to a drop in US natural gas prices in recent weeks. This trend is fueled by concerns about congestion in the market.
Despite the current challenges, UBS remains optimistic about the future of US natural gas, with a positive 12-month outlook. However, the firm advises investors to proceed with caution due to high roll costs that could impact performance.
UBS predicts that higher prices will be necessary in 2025 to meet growing export demand. Currently, US natural gas inventories are above the five-year average, standing at 3.2 trillion cubic feet as of July 12. This represents a significant surplus of 16.9% or 465 billion cubic feet above the 2019-2023 average.
While the surplus has decreased from its peak in mid-March, concerns about reaching capacity limits by the end of the injection season in October have caused prices to decline. Hurricane Beryl’s disruptions at LNG export terminals have added to these congestion fears, with US LNG exports temporarily dropping before bouncing back.
The ongoing recovery of US natural gas production has also contributed to these concerns. Despite these challenges, UBS remains positive about the future of US natural gas prices, driven by new LNG export terminals and increased pipeline exports to Mexico. However, the timeline for the Golden Pass export terminal has been pushed back to the end of 2025.
In conclusion, while the current market conditions may seem uncertain, there is still potential for growth in the US natural gas sector. It is important for investors to stay informed and cautious when navigating these fluctuations in prices and demand. Stay tuned for more updates on the financial markets and investment opportunities.