April Nymex natural gas (NGJ25) on Monday closed down -0.086 (-2.10%).
April nat-gas on Monday gave up an early advance and settled moderately lower after US forecasts warmed for later this month, which will reduce heating demand for nat-gas. Commercial forecaster Maxar Technologies said Monday that forecasts for late March show above-normal temperatures for the western part of the US, while the East Coast could see a period of below-normal temperatures that are then expected to shift higher.
Last Monday, 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 106.9 bcf/day (+3.8 y/y), according to BNEF. Lower-48 state gas demand Monday was 78.1 bcf/day (-3.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 15.7 bcf/day (+2.6% 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 March 8 rose +7.8% y/y to 77,360 GWh (gigawatt hours), and US electricity output in the 52-week period ending March 8 rose +3.35% y/y to 4,237,406 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 bullish for nat-gas prices since nat-gas inventories for the week ended March 7 fell -62 bcf, a larger draw than expectations of -50 bcf and a bigger draw than the 5-year average draw for this time of year of -56 bcf. As of March 7, nat-gas inventories were down -27.0% y/y and -11.9% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 35% full as of March 15, versus the 5-year seasonal average of 46% 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 14 fell -1 to 100 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).
