May Nymex natural gas (NGK23) on Thursday closed down -0.144 (-6.68%).
May nat-gas prices Thursday plummeted to a 1-1/2 month nearest-futures low after updated weather forecasts called for unusually mild U.S. weather for mid-April, reducing heating demand for nat-gas. Maxar Technologies said above-normal temperatures are expected in the eastern two-thirds of the U.S. from April 11-20. Nat-gas prices extended their losses after the EIA reported that weekly U.S. nat-gas inventories fell -23 bcf, right on expectations.
Lower-48 state dry gas production on Thursday was 99.0 bcf (+4.5% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Thursday was 75.7 bcf/day, up +8.0% y/y, according to BNEF. On Thursday, LNG net gas flows to U.S. LNG export terminals was 13.8 bcf, up +0.4% w/w. Last 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 (NGJ23) last 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 Apr 2, far above the 5-year seasonal average of 35% full for this time of year. Also, U.S. nat-gas inventories were +19.5% above their 5-year average as of Mar 31.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended Apr 1 fell -0.9% y/y to 70,906 GWh (gigawatt hours). However, cumulative U.S. electricity output in the 52-week period ending Apr 1 rose +1.1% y/y to 4,109,436 GWh.
Thursday's weekly EIA report was neutral to bearish for nat-gas prices since it showed U.S. nat gas inventories fell -23 bcf, right on expectations. Nat-gas inventories are +19.5% above their 5-year seasonal average.
Baker Hughes reported Thursday that the number of active U.S. nat-gas drilling rigs in the week ended Apr 7 fell by -2 to 158 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).
