May Nymex natural gas (NGK23) on Friday closed up +0.112 (+5.32%).
May nat-gas prices Friday recovered from early losses and rallied sharply on the outlook for cooler U.S. April weather that will boost heating demand for nat-gas. Updated weather forecasts from NOAA show that below-normal temperatures are expected for the central and eastern U.S. from April 6-10.
Lower-48 state dry gas production on Friday was 100.7 bcf (+4.6% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Friday was 74.9 bcf/day, up +1.3% y/y, according to BNEF. On Friday, LNG net gas flows to U.S. LNG export terminals was 14.0 bcf, up +11.1% w/w. On Wednesday, LNG net flows to U.S. LNG export terminals rose to a record 14.2 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.
Nat-gas prices have fallen sharply over the past three months and posted a 2-1/2 year nearest-futures low Wednesday as normally mild weather across the northern hemisphere erodes 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 U.S. Gas storage across Europe was 56% full as of Mar 27, far above the 5-year seasonal average of 34% for this time of year. Also, U.S. nat-gas inventories were +22.7% above their 5-year average as of Mar 17.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended Mar 25 rose +5.9% y/y to 74,307 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending Mar 25 rose +1.2% y/y to 4,110,090 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices since it showed U.S. nat gas inventories fell -47 bcf, less than expectations of -54 bcf. Nat-gas inventories are +21.0% above their 5-year seasonal average.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended Mar 31 fell by -2 to 160 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).
