May Nymex natural gas (NGK25) on Friday closed down -0.301 (-7.27%).
May nat-gas prices plunged to a 1-week low Friday on global trade war concerns and forecasts for warmer US temperatures, which could curb heating demand for nat-gas. Trade war concerns hammered equity markets for the past two days and sparked risk-off sentiment in asset markets, undercutting nat-gas prices. Also, the Commodity Weather Group said Friday that forecasts for the eastern half of the US shifted warmer for April 14-18.
Last 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 Friday was 106.4 bcf/day (+4.3 y/y), according to BNEF. Lower-48 state gas demand Friday was 74.5 bcf/day (-11.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 15.5 bcf/day (-2.2% 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 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. Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.
Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended March 28 rose +29 bcf, a larger build than expectations of +28 bcf and well above the 5-year average draw for this time of year for a -13 bcf draw. As of March 28, nat-gas inventories were down -21.5% y/y and -4.3% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 34% full as of April 1, versus the 5-year seasonal average of 45% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending April 4 fell -7 to a 6-1/2 month low of 96 rigs, just 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).
