May Nymex natural gas (NGK23) on Thursday closed up +0.027 (+1.22%).
Nat-gas prices Thursday recovered from early losses and closed moderately higher. Forecasts for colder-than-usual U.S. weather that will boost heating demand for nat-gas sparked short covering late Thursday morning after the Commodity Weather Group said below-normal temperatures are expected across the central and eastern U.S. from Apr 25-29.
Nat-gas prices Thursday initially moved lower after U.S. weekly nat-gas inventories rose more than expected. The EIA reported that nat-gas inventories rose +75 bcf, above expectations of +70 bcf. That pushed total U.S. nat-gas stockpiles to 1.930 tcf, +20.5% above the 5-year average for this time of year.
Nat-gas prices have fallen sharply over the past three months and posted a 2-1/2 year nearest-futures low (NGK23) last Friday 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 Thursday was 99 bcf (+2.8% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Thursday was 66.3 bcf/day, down -6.4% y/y, according to BNEF. On Thursday, LNG net flows to U.S. LNG export terminals were 14.2 bcf, down -4.1% w/w. On Sunday, 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 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.
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 last Friday that the number of active U.S. nat-gas drilling rigs in the week ended Apr 14 fell by -1 to 157 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.
