Natural gas prices continue to decline - Reasons decoded by Zee Business analyst

Natural gas prices continue to drop in the global market on Monday morning. While all the commodities are under pressure today, natural gas in the energy complex is worst affected. Last week it registered a downfall of around 7% and the trend continues even this week. 

In the United States, the price of natural gas is at its six weeks low. Dutch TTF and UK Natural Gas - both of which are benchmark hubs for gas prices in Europe - have seen a 10-25% correction. This is a huge downfall from the record-high prices of natural gas. 

According to Zee Business analyst, the most crucial reason behind this continuous downfall is the concern expressed by both World Bank and International Monetary Fund (IMF). They both have warned that the global economy could tip into recession next year. 

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Also, the production of natural gas in the United States reached to record 99 billion cubic feet per day in the month of September. This is around 1-1.5% month-on-month increase. 

It is worth mentioning that earlier there were speculations that Freeport LNG, the second-largest US LNG exporter, would start production in the month of October. However, the date to resume production has now been extended by two months. Now it is expected to resume operations in November. Another LNG plant in America is closed for maintenance.

Interestingly, European gas storage in north west Europe is 5%more than the average of the last 5 years.