April Nymex natural gas (NGJ25) on Thursday closed up +0.089 (+2.31%).
April nat-gas prices Thursday recovered from a 5-week low and settled higher. Short covering emerged in nat-gas futures ahead of Thursday's expiration of the April nat-gas futures contract. Nat-gas prices Thursday initially fell to a 5-week low after weekly EIA nat-ga inventories rose +37 bcf, above expectations of +33 bcf.
Also, nat gas prices were undercut by expectations for above-normal temperatures that will curb heating demand for nat-gas. Forecaster Atmospheric G2 said Thursday that forecasts shifted much warmer in the central and eastern parts of the US for April 1-April 4.
Earlier this 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 Thursday was 106.8 bcf/day (+4.8 y/y), according to BNEF. Lower-48 state gas demand Thursday was 75.5 bcf/day (-15.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 15.7 bcf/day (+0.7% 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 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. Bloomberg reported that the Trump administration is close to approving its first LNG export project, a Commonwealth LNG export facility in Louisiana. 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 21 rose +37 bcf, a larger build than expectations of +33 bcf and well above the 5-year average draw for this time of year for a -31 bcf draw. As of March 21, nat-gas inventories were down -24.0% y/y and -6.5% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 34% full as of March 23, versus the 5-year seasonal average of 45% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending March 21 rose +2 to 102 rigs, modestly 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).
