May Nymex natural gas (NGK23) on Monday closed up +0.040 (+1.79%).
May nat-gas prices Monday morning posted moderate gains on the outlook for colder-than-normal U.S. temperatures that would boost heating demand for nat-gas. The Commodity Weather Group said below-normal temperatures are expected across the eastern half of the U.S. from April 29 to May 3. Record U.S. nat-gas production is limiting the upside in prices after lower-48 state U.S. dry gas production rose to an all-time high of 101.7 bcf on Sunday.
Nat-gas prices have fallen sharply over the past three months and posted a 2-1/2 year nearest-futures low (NGK23) Apr 14 as abnormally mild weather across the northern hemisphere this past winter eroded 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 United States. Gas storage across Europe was 57% full as of Apr 16, far above the 5-year seasonal average of 36% full for this time of year. Nat-gas inventories in the U.S. were +20.5% above their 5-year seasonal average as of Apr 14.
Lower-48 state dry gas production on Monday was 100.8 bcf (+5.3% y/y), just below the record high of 101.7 bcf posted on Sunday, according to BNEF. Lower-48 state gas demand Monday was 72 bcf/day, up +22.0% y/y, according to BNEF. On Monday, LNG net flows to U.S. LNG export terminals were 14.8 bcf, unchanged w/w. On Apr 16, LNG net flows to U.S. LNG export terminals rose to a record 14.9 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.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported last Wednesday that total U.S. electricity output in the week ended Apr 15 fell -1.4% y/y to 68,576 GWh (gigawatt hours). Although, cumulative U.S. electricity output in the 52-week period ending Apr 15 rose +1.0% y/y to 4,108,950 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since it showed U.S. nat gas inventories rose +75 bcf, above expectations of +70 bcf. Nat-gas inventories are +20.5% 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 Apr 21 rose by +2 to 159 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.
