May Nymex natural gas (NGK23) on Monday closed up +0.161 (+7.62%).
May nat-gas Monday rallied sharply to a 3-week high as a shift in U.S. weather forecasts to winter-like temperatures will boost heating demand for nat-gas. Forecaster Atmospheric G2 said below-normal temperatures are seen boosting heating demand across the eastern two-thirds of the U.S. from April 22-26. Also, U.S. LNG exports Sunday climbed to a record 14.9 bcf, a sign of strong foreign demand for U.S. nat-gas supplies.
Nat-gas prices have fallen sharply over the past three months and posted a 2-1/2 year nearest-futures low (NGK23) last Friday as abnormally mild weather across the northern hemisphere this past winter eroded heating demand for nat-gas. January was the sixth-warmest across the contiguous 48 U.S. states in data from 1895. This winter's warm temperatures have caused rising nat-gas inventories in Europe and the United States. Gas storage across Europe was 56% full as of Apr 9, far above the 5-year seasonal average of 35% full for this time of year. Nat-gas inventories in the U.S. were +18.9% above their 5-year seasonal average as of Apr 7.
Lower-48 state dry gas production on Monday was 99.3 bcf (+3% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Monday was 69.5 bcf/day, down -6% y/y, according to BNEF. On Monday, LNG net flows to U.S. LNG export terminals were 14.7 bcf, up +6.5% w/w. On Sunday, LNG net flows to U.S. LNG export terminals rose to a record 14.9 bcf/day as nat-gas exports continue to increase from the Freeport LNG terminal as the terminal was partially reopened after being closed since last June because of an explosion.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total U.S. electricity output in the week ended Apr 8 rose +0.7% y/y to 71,516 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending Apr 8 rose +1.0% y/y to 4,109,905 GWh.
Last Thursday's weekly EIA report was slightly bullish for nat-gas prices since it showed U.S. nat gas inventories rose +25 bcf, slightly below expectations of +28 bcf. Nat-gas inventories are +18.9% above their 5-year seasonal average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended Apr 14 fell by -1 to 157 rigs, just below the 3-1/4 year high of 166 rigs posted in the week ended Sep 9. Active rigs have more than doubled from the 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.
