Natural Gas Waits For Trump-Xi Meeting

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Crispus Nyaga
Natural gas has been having a great year. Its price has risen by more than 50% this year as demand rises. In the United States, the total demand for the commodity is up 14% y-o-y to 96.4 bcf per day. At the same time, the supply too is up by 12.0% y-o-y to 95.3 bcf per day this year. This is mostly because of the extended cold season. Around the world, the demand for the gas has risen as more countries move to natural gas as a source of energy.
A good example of this is China, which is battling the massive pollution problem. In the past nine months, the demand for natural gas in the country increased by 17.7%, which was higher than the total demand for 2017. As you recall, last year, China overtook South Korea as the biggest gas importer in the world. To handle the demand for the gas, Beijing Gas is currently working on the imported liquefied natural gas (LNG) processing terminal in Caofeidian near Tianjin. This terminal will be completed in 2020, and will see its annual capacity increase to 10 million tonnes from the current 6.5 million tonnes. Other such terminals are being constructed.
As a commodity, the increasing price of natural gas will lead to a boost in production. This will happen as battered producers aim to profit from the rising prices. As the supply increases, the price will start coming down. As shown below, the total number of natural gas rigs have been increasing, albeit at a slower rate.

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In the past week, the price of natural gas has reduced from $4.87 from $4.18. This is slightly higher than the lows of $3.88. The meeting between Trump and Xi this week will play an important role in the price of gas. This is because earlier this year, China imposed tariffs on American natural gas. Depending on how the meeting goes, the price of gas could test the above resistance and support levels.

The post Natural Gas Waits For Trump-Xi Meeting appeared first on Forex.Info.



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