May Nymex natural gas (NGK25) on Monday closed down by -0.229 (-7.06%).
May nat-gas prices plunged to a 2-3/4 month low on Monday and settled sharply lower. Forecasts for warmer US temperatures that curb heating demand and allow inventories to rebuild are weighing on nat-gas prices. Forecaster Atmospheric G2 said Monday that temperatures in the eastern half of the US will be well above normal for April 26-30. Losses in nat-gas prices accelerated Monday after prices fell below the 200-day moving average, triggering technical selling.
Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis.
Last month, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season. BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.
Lower-48 state dry gas production Monday was 106.8 bcf/day (+6.9 y/y), according to BNEF. Lower-48 state gas demand Monday was 65.9 bcf/day (-7.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 15.0 bcf/day (-5.6% 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 last Wednesday that total US (lower-48) electricity output in the week ended April 12 rose +6.4% y/y to 73,420 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 12 rose +3.7% y/y to 4,247,718 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. Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended April 11 rose +16 bcf, below expectations of +24 bcf and below the 5-year average draw for this time of year of +50 bcf. As of April 11, nat-gas inventories were down -20.9% y/y and -3.9% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 36% full as of April 15, versus the 5-year seasonal average of 47% full for this time of year.
Baker Hughes reported last Thursday that the number of active US nat-gas drilling rigs in the week ending April 18 rose +1 to 98 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.
