Natural Gas Hot Topic Today

Natural gas is a big topic today, with news flow coming from around the globe. In Israel, recent discoveries of massive offshore natural gas deposits began flowing on Saturday. Israel discovered two large fields, Tamar and the larger Leviathan, in 2009 and 2010. Tamar, which holds an estimated 240 billion cu. meters, began pumping to the Israeli market on Saturday, while Leviathan, which boasts an estimated 500 billion cu. meters of gas, is expected to go online in 2016, the approximate time when exports are expected to begin.  The country’s proximity to Middle Eastern and European markets could make it an important regional player. 

While on the other side of the world, Japan struggles to source energy products ever since the Tsunami destroyed its nuclear generation plants. Japan’s energy importers are stepping up preparations to import shale gas from the United States, a move expected to ease skyrocketing procurement costs for liquefied natural gas driven by Tokyo’s verbal bludgeoning of the yen. Lower LNG costs will help curb electricity rates that have soared since the loss of atomic power caused by the Fukushima disaster sent demand for fossil fuels soaring. Only two of Japan’s 50 reactors are running.

US natural gas is trading at 3.978 down by 41 pips after a super charged end of the month that saw prices climb as high as 4.12. US natural gas futures usually tumble this time of year as the end of winter lowers residential demand for heating. Money managers, including hedge funds and commodity trading advisers, in the week to March 26 raised their net long position in natural gas futures, options and swaps for the sixth week in a row, breaking the record for largest net long position set the previous week. Natural gas futures declined on profit-booking, shrugging off a supportive weekly inventory report and with the milder turn in the extended weather outlook prompting some longs to liquidate ahead of a three-day holiday weekend. The US Energy Information Administration report showed total domestic gas inventories fell last week by 95bn cubic feet to 1.781 trillion cubic feet.

Crude oil prices are trading marginally lower today at 96.72 down 51 cents. Traders can expect prices to remain under pressure for the day as Exxon Mobile Corp has shut a pipeline which carries 95,000 bpd to US Gulf Coast which would further increase the inventory build-up in the US, already standing at elevated levels. Crude oil prices rose, the last session of the first quarter, in choppy trading with stronger Wall Street equities and a weaker dollar supporting dollar-denominated oil prices.

Japan’s crude oil imports from Iran fell nearly a third in February from the same month a year earlier, trade ministry data showed on Friday, as tougher western sanctions targeting payments and insurance appeared to taking hold. Disappointing data from China and Japan are expected to weigh on prices as markets reopen after the holiday.