Natural gas prices declined sharply on Wednesday, March 4, tracking weakness in global gas benchmarks despite the ongoing geopolitical tensions in the Middle East.
On the Multi Commodity Exchange (MCX), natural gas futures were trading at Rs 279.5 per MMBtu, down Rs 9 or 3.12% as of 09:33 AM IST.
Profit booking after recent rally
The fall in prices largely reflects profit booking after the sharp rally seen earlier in the week. Natural gas prices had surged amid fears that the escalating conflict in the Middle East could disrupt LNG supply routes.
Concerns had intensified after reports of disruptions around Qatar’s LNG supply chain, which accounts for nearly 20% of global LNG exports. However, as markets reassessed the immediate supply risks, traders began unwinding positions, leading to a correction in prices.
Limited direct impact from Middle East conflict
Another factor weighing on prices is the limited direct impact of the Middle East crisis on US natural gas supply, which heavily influences global benchmarks.
The United States produces most of the natural gas it consumes domestically, making the Henry Hub benchmark more dependent on domestic supply, storage levels and weather conditions rather than geopolitical disruptions.
Recent data showing stable production levels and adequate inventories has reduced immediate concerns about supply shortages.
Seasonal demand pressures
Seasonal demand trends are also contributing to the decline. With the winter heating season gradually ending in the Northern Hemisphere, demand for natural gas is expected to soften.
Weather forecasts indicating milder temperatures in the US are further reducing heating demand expectations, putting additional downward pressure on prices.
Global benchmarks easing
International gas benchmarks such as Henry Hub, European TTF and Asian JKM have also pulled back slightly after the initial spike triggered by geopolitical concerns. This global easing is being reflected in MCX natural gas futures.
Despite the decline, analysts note that volatility in energy markets remains elevated, and any escalation in the Middle East conflict or disruptions to LNG supply routes could quickly push prices higher again.
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