May Nymex natural gas (NGK24) on Thursday closed down by -0.015 (-0.91%).
May nat gas prices Thursday dropped to a 1-month nearest-futures low and closed moderately lower on a larger than expected build in weekly EIA nat-gas supplies. The EIA reported Thursday that nat-gas inventories for the week ended April 19 rose +92 bcf, more than expectations of +86 bcf.
Prices recovered from their worst levels based on expectations for warm weather in the southern US, which could boost nat-gas demand from electricity providers to cover increased air-conditioning usage. Maxar Technologies said Thursday that the forecast is trending warmer for the lower Midwest and South from April 30-May 4.
Nat-gas prices collapsed earlier this year, with nearest-futures (NGJ24) posting a 3-3/4 year low on March 26 after an unusually mild winter curbed heating consumption for nat-gas and pushed inventories well above average.
Nat-gas prices are also under pressure after the Freeport LNG nat-gas export terminal in Texas on March 1 shut down one of its three production units due to damage from extreme cold in Texas. The unit recently reopened on a partial basis. However, Freeport said that once the production unit is fully reopened, the other two units will be taken down for maintenance, and all three units will not return online until May. The lack of full capacity of the Freeport export terminal limits US nat-gas exports and boosts US nat-gas inventories.
Lower-48 state dry gas production Thursday was 97.5 bcf/day (-2.5% y/y), according to BNEF. Lower-48 state gas demand Thursday was 70.8 bcf/day (-2.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 11.3 bcf/day (+8.2% 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 electricity output in the week ended April 20 rose +2.48% y/y to 71,072 GWh (gigawatt hours), although cumulative US electricity output in the 52-week period ending April 20 fell -0.27% y/y to 4,096,373 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended April 19 rose by +92 bcf, more than expectations of +86 bcf and above the 5-year average build for this time of year of +86 bcf. As of April 19, nat-gas inventories were up +20.7% y/y and were +37.0% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 62% full as of April 22, above the 5-year seasonal average of 45% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending April 19 fell by -3 rigs to a 2-1/4 year low of 106 rigs. Active rigs have fallen since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 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.
