Will the US push natural gas prices down in the long run?
The United States surpassed Qatar and Australia last year to become the biggest exporter of liquid natural gas in the world. This was made feasible by Europe’s increased demand for Liquefied Natural Gas (LNG) as it desperately needed a substitute to Russian supplies.
This year, three additional LNG production plants might get final investment decisions. The United States might have a potential of 169 million metric tons of LNG by 2027, surpassing Qatar, which is currently building its own capacity and aiming for 110 million metric tons by the same year.
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Experts have recently cautioned that when all of the planned LNG production facilities are constructed, worldwide capacity might increase by 67% to 636 million metric tons per year by 2030. This might result in market saturation and a decline in pricing.
Exxon Mobil is looking to clean up it’s gas business
Exxon Mobil is looking to offload its controlling share in the Rovigo LNG plant located off the coast of Italy. This is part of the company’s goal to divest non-core businesses, according to a statement released on Wednesday.
“Tests like this are consistent with our focused investment strategy, highlighting our willingness to divest non-core assets to those who can derive greater value,” Exxon spokesperson Meghan Macdonald said.
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Exxon stated that while it was confirming market interest, it had neither decided on a prospective sale nor located a buyer at this point. The business stated that any acquisition would not affect its import of LNG into Adriatic LNG terminal or its involvement in Italy and Europe as a natural gas provider.
Natural gas may yet see a climb
Wednesday saw a continuation of the daily decline in natural gas prices, accompanied by a decline in open interest, which implies a potential comeback in the near future. Natural gas prices started to climb on Thursday, at the time of writing, more than 3.25% up so far.
The weekly candle pattern is a fight for direction, with a slight win for the bulls. If today’s bulls prevail until the end of the week, we could be re-visiting the resistance of $3. The bears are still aiming for the $2 support.
Natural gas 1W chart, source: tradingview.com, author’s analysis