April Nymex natural gas (NGJ25) on Wednesday closed up +0.021 (+0.55%).
April nat-gas prices Wednesday posted modest gains as prices consolidated above Tuesday's 3-week low. However, nat gas prices were undercut by expectations for above-normal early-spring temperatures that will curb heating demand for nat-gas. Forecaster Atmospheric G2 said Wednesday that forecasts shifted much warmer in the eastern half of the US for March 31-April 4, while the western and central parts of the US moved cooler.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb +33 bcf for the week ended March 21 versus the five-year average of a -31 bcf draw.
Earlier this 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 Wednesday was 106.6 bcf/day (+4.1 y/y), according to BNEF. Lower-48 state gas demand Wednesday was 81.1 bcf/day (-5.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 15.8 bcf/day (+3.5% 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 March 22 rose +0.9% y/y to 72,289 GWh (gigawatt hours), and US electricity output in the 52-week period ending March 22 rose +3.55% y/y to 4,239,323 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.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended March 14 rose +9 bcf, a larger build than expectations of +4 bcf and well above the 5-year average draw for this time of year for a -31 bcf draw. As of March 14, nat-gas inventories were down -26.8% y/y and -10.0% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 34% full as of March 23, versus 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 March 21 rose +2 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.
