Market Insights > First Look

First Look - Natural gas on track for fourth straight weekly decline

WTI prompt-month contract fell 88c to $61.91/Bbl on Friday morning (7:45 AM CT)
- Oil prices have declined sharply this month amid concerns that the US-China trade war will cripple global demand growth
- Additional bearish pressure came from reports that OPEC+ members are considering production increases
  - The group is scheduled to meet on May 5 to discuss its output strategy for June
China weighs tariff exemptions on certain US goods (BBG)
- Authorities are considering removing additional levies on several products, including ethane
- Many of China's new ethane crackers lack feedstock flexibility, making them reliant on ethane
- The exemption list remains under discussion and could change
- President Trump said Thursday that trade talks with China were ongoing, despite earlier denials from Beijing

Natural gas heads for another weekly loss
- Prompt prices have declined by 34c this week and more than $1.30 over the past four weeks, as prices slide below $3/MMbtu
- Yesterday, the EIA reported an injection of 88 Bcf into underground storage, which was larger than most expected and put the deficit to the five-year average at -44 Bcf
- Lower 48 production is down today to 104.7 Bcf/d, compared to last Friday’s record of 107.1 Bcf/d, according to S&P data
Coal demand could fall 25% in ten years (BBG)
- Global coal demand has likely peaked and will increasingly be displaced by renewables and cheaper natural gas
- BloombergNEF expects coal consumption to fall 25% by 2035, using a model based on fuel economics rather than environmental policies
- Recent years have seen growth in coal consumption driven by China, but slower growth in power demand, weaker industrial activity, and the continued deployment of renewables will suppress demand going forward