Natural gas price has eased at around $5.75 per a million British thermal units in the New York Mercantile Exchange. In the previous session, the commodity dropped from $6.52; its highest level since February 2014. Despite the plunge, it remains about 138.06% higher than where it was at the beginning of the year.
Wednesday’s price movement was a reaction to the remarks by Russia’s president that his country was preparing to increase supply in an effort to stabilize the skyrocketing energy prices. According to experts, one of the drivers of the soaring natural gas price is Russia’s move to hold back on supplies.
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While Putin’s assertions have yielded a glimmer of hope, investors are still keen on the expected rise in demand over the upcoming winter season. Indeed, the European Union has warned that the soaring energy prices could result in higher inflation. The situation has impacted industrial production in the continent with some firms having to reduce production.
Natural gas price will also be reacting to the EIA storage report scheduled for release on Thursday. According to the agency, the amount of gas stored underground was at 3,170 billion cubic feet (Bcf) for the week ending on 24th September. The figure represents an increase of 88 Bcf from the previous week’s reading. Notably, the inventory is 15.4% lower than the amount recorded in the past year during a similar period. It is also 6.3% lesser than the 5-year average of 3,383 Bcf.
The data comes a day after crude oil inventory figures from the same agency showed an unexpected build. The recorded rise of 2.346 million barrels is lower than the prior week’s 4.578 million. However, analysts had expected a draw of 418,000 barrels. While oil price dropped as a reaction to the data, it remains above the crucial level of $80 per barrel.
Various experts, including JTD’s John Driscoll, are of the opinion that crude oil price will continue rallying in the year’s last quarter based on its status as an alternative to the undersupplied natural gas. Even with a rise in natural gas inventory, prices will likely remain higher than usual as the market projects a harsher winter.
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