U.S. Natural Gas Falls 9%, WTI and Brent Net Longs Rise, SPR Inventories Up 1 Million Barrels
U.S. natural gas futures experienced significant price declines in the week ending April 25, falling $0.31, or 9%, from $3.25 to $2.94. The June contract also dropped by $0.30, or 9%, from $3.41 to $3.11, with the 12-month spread widening by $0.24 (54%) due to a larger front-month delta. Despite the recent declines, prices rose by 5% in light trading as the front-month contract approached expiration.
Net long positions in U.S. natural gas decreased by 31 billion cubic feet (bcf) for the week ending April 18, with open interest dropping to its lowest level since June 2024. Net longs were 11 bcf (29%) above the 2022-24 average but 70 bcf (160%) below the 2017-21 average. The market has seen an excess inventory build of 189 bcf over the five-week period compared to the five-year average, with another 157 bcf expected in the next four weeks.
In crude oil markets, WTI net long positions rose by 36 million barrels (mmb), or 32%, for the week ending April 18, although long positions decreased by 16 mmb (9%) and shorts fell by 20 mmb (32%). WTI prices increased by $1.54 (3%) from $60.97 to $62.50. ICE Brent net long positions rose by 29 mmb (30%) on short covering, with Brent futures prices up $1.72 (3%) from $64.12 to $65.84.
Brent-WTI net long positions rose 66 mmb (31%) and open interest fell 86 mmb (1%) for the week ending April 18. Net long positions are 63% lower than in 2017-21 and 44% lower than in 2022-24.
Despite these increases, crude oil prices have recently declined, with WTI futures trading lower by about $1.22, or 1.94%, at $61.80, and session lows reaching $61.59. Technical indicators show crude trading below its 100- and 200-hour moving averages. Citi strategist Eric Lee noted a view that Brent could return to $60, citing ongoing bearish sentiment in the market.
The BCOM index rose 1.6% in the week to April, with hedge funds' net buying concentrated in WTI, Brent, Gas oil, and Livestock, while sellers focused on natural gas, corn, wheat, and gold.
U.S. Strategic Petroleum Reserve (SPR) crude inventories rose by approximately 1.0 million barrels week-over-week to 398.5 million barrels, with sour crude up by 0.6 million barrels to 254.2 million and sweet crude up by 0.5 million barrels to 144.4 million.
Written with ChatGPT (GPT-4).
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Giovanni Staunovo🛢
