April Nymex natural gas (NGJ23) on Monday closed down -0.146 (-6.18%).
Apr nat-gas Monday tumbled to a 5-week low and closed sharply lower on ample U.S. nat-gas inventories and ramped-up production. U.S. nat-gas inventories are +22.7% above their 5-year average as of March 17, and BNEF data showed lower-48 U.S. nat-gas production Monday at 100.1 bcf, up +5.1% y/y. In addition, nat-gas prices are under pressure as the ongoing delay to restart full operations at the Freeport LNG export terminal may boost U.S. nat-gas stockpiles as exports are curtailed.
Lower-48 state dry gas production on Monday was 100.1 bcf (+5.1% 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 82.9 bcf/day, down -0.8% y/y, according to BNEF. On Monday, LNG net flows to U.S. LNG export terminals were 12.9 bcf, up +2.0% w/w. On Mar 3, LNG net flows to U.S. LNG export terminals rose to a record 14.1 cf/day as nat-gas exports restarted 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 2-1/4 year nearest-futures low on Feb 22 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 20, far above the 5-year seasonal average of 35% 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 last Wednesday that total U.S. electricity output in the week ended Mar 18 rose +5.2% y/y to 74,499 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending Mar 18 rose +1.2% y/y to 4,105,969 GWh.
Last Thursday's weekly EIA report was neutral for nat-gas prices since it showed U.S. nat gas inventories fell -72 bcf, slightly less than expectations of -73 but above the 5-year average draw of -45 bcf for this time of year. Nat-gas inventories are +22.7% 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 Mar 24 was unchanged at a 6-month high of 162 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.
