April Nymex natural gas (NGJ25) on Friday closed down -0.100 (-2.54%).
April nat-gas on Friday dropped to a 1-1/2 week low and settled moderately lower on forecasts for above-normal temperatures next month, which will curb heating demand for nat-gas. Forecaster Maxar Technologies said Friday that above-normal temperatures are expected from the Rockies to the Atlantic from March 10-14.
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Nat-gas prices have been whipsawed over the past week by weather factors and have consolidated below last Thursday's 2-year high. However, nat-gas prices remain near the top of the February rally, which was driven mainly by the inventory drawdown caused by the recent cold weather. As of February 21, EIA nat-gas inventories were -11.5% below their 5-year average; the tightest supplies have been in over 2-1/2 years.
Lower-48 state dry gas production Friday was 107.8 bcf/day (+2.8 y/y), according to BNEF. Lower-48 state gas demand Friday was 80.2 bcf/day (-10.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 15.6 bcf/day (+2.1% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended February 22 rose +19.9% y/y to 90,673 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 22 rose +3.1% y/y to 4,230,167 GWh.
In a bullish longer-term factor for nat-gas prices, President Trump lifted the Biden administration's pause on approving gas export projects in January, thus moving into active consideration a backlog of about a dozen LNG export projects. Bloomberg reported that the Trump administration is close to approving its first LNG export project, a Commonwealth LNG export facility in Louisiana. Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.
Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended February 21 fell -261 bcf, a smaller draw than expectations of -271 bcf but a larger draw than the 5-year average draw for this time of year of -141 bcf. As of February 21, nat-gas inventories were down -22.5% y/y and -11.5% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 40% full as of February 25, versus the 5-year seasonal average of 51% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending February 28 rose +3 to 102 rigs, modestly above the 3-1/2 year low of 94 rigs posted on September 6, 2024. Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
