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Natural Gas: Poised to Roar Back in 2024?

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As per the U.S. Energy Information Administration, the most recent winter season ended with 39% more natural gas remaining in storage as compared to the five-year average. This is largely on account of the relatively warmer winter. Partly as a result of this relatively higher inventory, the government agency forecasts that lesser volumes of natural gas will be injected than usual from the month of April through October this year. At the same time, it is projected that the United States will produce less natural gas on average in the second and third quarters of the year as compared to the first. Despite this, the United States is expected to have the most natural gas in storage on record when the “winter withdrawal season” begins in November.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Production cuts in the U.S. would have a slightly different around the world. Over the course of the past decade, the U.S. has grown into becoming the world’s largest exporter of Liquefied Natural Gas (LNG) – far outstripping Qatar, Russia and Australia.

In 2023, U.S. LNG exports averaged 11.9 billion cubic feet per day (Bcf/d) with exports steadily increasing in the latter half of the year. Europe is by far the largest recipient of American gas as the Russo-Ukrainian conflict drags on and the Nordstream pipeline seeing little to no chance of returning.

Europe’s LNG imports capacity continued to expand and is expected to increase by more than one-third in 2024 relative to 2021. The countries that imported the most U.S. LNG were the Netherlands, France, and the United Kingdom, with a combined 35% of all U.S. LNG exports. LNG imports increased in the Netherlands after the Gate LNG regasification terminal was expanded and two new floating storage and regasification units (FSRUs) were commissioned. Germany began importing LNG in 2023 when three new FSRUs were commissioned. Another four terminals (three of which are FSRUs) are expected to come online between 2024 and 2027.

Since Europe also experienced a warmer winter than average, there was an additional basis for natural gas prices trending low in the year so far. However, given that Europe continues to see a gradual increase in energy consumption, it can be expected that there will be an uptick in gas prices given that production will be pared down in the U.S. As it stands, the “Henry Hub” prices – which constitute the prices of natural gas originating in the U.S. minus transmission/transport costs outwards – are expected to trend higher throughout the rest of 2024, with futures prices showing a wide range of confidence intervals on account of the tenuous supply versus demand scenario so far.

Seasonal patterns are writ large upon the price curves. For example: as of the end of March, Standard Chartered estimates that the “NYMEX basis Henry Hub nearby future” price will average $4.80 per million British thermal units (MMBtu) in Q2 2024, $4.70 per MMBtu across Q3 and Q4 of 2024, $4.80 per MMBtu in Q1 2025, and $4.70 per MMBtu in Q2 2025. However, as production cuts are already expected and global demand not seeing substantial ebbs, it can be expected that gas prices will see spikes above these stated averages as the months roll on. All in all, it’s an opportune moment to consider an investment.

While Henry Hub contracts are predominantly traded in the commodities exchange NYMEX in the U.S., with a rather large institutional focus, professional investors in Europe can also gain exposure to the performance of the nearest Henry Hub futures contract via the Leverage Shares Natural Gas ETC, a fully collateralised, UCITS-eligible Exchange-Traded Commodity (ETC) that provides a passive, total return exposure to front-month Natural Gas futures traded on NYMEX which are continuously rolled on a pre-determined schedule.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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