May Nymex natural gas (NGK25) on Monday closed down by -0.202 (-5.73%).
May nat-gas prices settled sharply lower on Monday due to revised warmer US weather forecasts, which will curb heating demand for nat-gas. On Monday, the Commodity Weather Group said that forecasts shifted warmer for the eastern half of the US and will remain above normal for Texas for April 19-23.
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 Monday was 106.7 bcf/day (+5.7 y/y), according to BNEF. Lower-48 state gas demand Monday was 69.4 bcf/day (+3.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 16.2 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 April 5 rose +4.05% y/y to 74,475 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 5 rose +3.64% y/y to 4,243,287 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.
Last Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended April 4 rose +57 bcf, close to expectations of +58 bcf and well above the 5-year average draw for this time of year for a +17 bcf build. As of April 4, nat-gas inventories were down -19.8% y/y and -2.1% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 35% full as of April 12, versus the 5-year seasonal average of 46% 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 April 11 rose +1 to 97 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).
