April Nymex natural gas (NGJ25) on Thursday closed up by +0.027 (+0.66%).
April nat-gas on Thursday rebounded from a 1-1/2 week low and posted moderate gains after weekly EIA nat-gas inventories fell more than expected. The EIA reported that nat-gas inventories fell -62 bcf the week of March 7, a larger draw than the expectations of -50 bcf. Nat-gas prices Thursday initially moved lower on the outlook for warmer US weather, which will curb heating demand for nat-gas. The Commodity Weather Group said Thursday that forecasts have shifted warmer for the eastern half of the US for March 18-22.
On Monday, 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. As of March 7, EIA nat-gas inventories were -11.9% below their 5-year average, and the tightest supplies have been in over 2-1/2 years.
Lower-48 state dry gas production Thursday was 107 bcf/day (+4.0 y/y), according to BNEF. Lower-48 state gas demand Thursday was 77.6 bcf/day (+8.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 15.4 bcf/day (+2.0% 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 8 rose +7.8% y/y to 77,360 GWh (gigawatt hours), and US electricity output in the 52-week period ending March 8 rose +3.35% y/y to 4,237,406 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 bullish for nat-gas prices since nat-gas inventories for the week ended March 7 fell -62 bcf, a larger draw than expectations of -50 bcf and a bigger draw than the 5-year average draw for this time of year of -56 bcf. As of March 7, nat-gas inventories were down -27.0% y/y and -11.9% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 36% full as of March 11, versus the 5-year seasonal average of 47% 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 7 fell -1 to 101 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).
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.
