U.S. natural gas up 6%, apparently on bet over Russia fertilizer demand

Investing.com — Storage fills for natural gas in the United States came in as expected for last week, and there was not much of a change either in weather forecasts. Yet, U.S. gas prices rallied some 6% Thursday in a development market watchers said could have more to do with the Russia-Ukraine situation.

Most-active contract on the New York Mercantile Exchange’s Henry Hub settled up 15.4 cents, or 5.9%, at $2.757 per mmBtu, or million metric British thermal units.

The U.S. Energy Information Administration, or EIA, reported earlier in the day that for natural gas rose by 41 billion cubic feet, or bcf, during the week ended July 14 — virtually in line with the 40-bcf injection forecast by industry analysts tracked by Investing.com.

With all else, including the weather, being equal, the fallout from the collapse of the Black Sea Grain Initiative after Russia’s pullout from the deal was cited as a possible catalyst for the rally in U.S. gas.

Since withdrawing from the U.N.-brokered deal that allowed Ukrainian grain exports to flow to other countries, Russian leader Vladimir Putin had laid out his demands for the deal to be reinstated. At the top of the list was the lifting of international sanctions on Russian fertilizer deliveries.

“If the demands are met, Russian gas supply will be drawn from as the country’s fertilizer,” said analysts at Houston-based energy markets advisory Gelber & Associates.

If Putin gets his way, “a huge chunk of the fertilizer industry resumes manufacturing in full force”, and will be tapping Russian gas stockpiles too — a bullish development, said Gelber’s analysts who noted the rally on the Henry Hub coincided with the breaking of this news on Russian demands over the Black Sea front.