The price of natural gas showed little change on Wednesday, attempting to recover after a significant sell-off in the previous session. The approaching expiration day of front-month options and futures contracts is likely contributing to the increased volatility as the month comes to a close. Meanwhile, the ongoing heatwave in North America and Europe continues to drive demand for air conditioning, although temperatures in the US are expected to ease. Additionally, natural gas prices have climbed towards a crucial level of around $3.000 MMBtu, potentially posing a threat to the longer-term downtrend.
Stability Returns to Natural Gas Market as Russia Turmoil Subsides
During the US session on Wednesday, the natural gas price traded relatively unchanged, indicating a stabilization after the heavy sell-off experienced the day before. The calming of Russia’s political situation following the failed coup by Wagner mercenaries has brought some stability to the markets. However, traders are still adjusting their positions ahead of the end of the month, leading to some residual volatility. The heatwave that has affected various parts of the US is now expanding into the South. Still, weather forecasts suggest that temperatures will ease next week, which could potentially reduce the demand for air conditioning.
Israel Urged to Reevaluate Natural Gas Export Policy
In a recent letter seen by Reuters, a senior official at Israel’s Finance Ministry called for an urgent examination of the country’s natural gas export policy. Israel is expected to double its gas output in the coming years and is preparing for a highly-anticipated licensing round for new oil and gas exploration blocks offshore. Yogev Gardos, Israel’s budget director, expressed concerns that exporting too much natural gas could jeopardize the country’s energy security and result in higher electricity prices. Gardos emphasized that the energy landscape has changed since the previous review in 2018, partly due to the slower-than-expected deployment of renewable energy sources in Israel. Energy Minister Israel Katz responded to the letter, asserting his authority in making decisions regarding the business gas prices.
Israel Sets Limits on Natural Gas Exports to Prevent Energy Crisis
Following the discovery of vast natural gas reserves off its Mediterranean coast over a decade ago, Israel established limits on gas exports in 2013, reserving approximately 60% of the reserves for domestic use. Currently, the country is preparing for increased gas production and a new licensing round. However, there are ongoing debates regarding the appropriate level of natural wholesale gas prices. The recent call for a reevaluation of export policy reflects concerns about maintaining Israel’s energy security amidst changing market dynamics and the slower implementation of renewable energy sources in the country.