May Nymex natural gas (NGK23) on Tuesday closed up +0.091 (+4.00%).
May nat-gas Tuesday rallied sharply for a second day and posted a 4-week high. Nat-gas prices rallied on outlook for colder temperatures in the U.S. that would boost heating demand for nat-gas in the northern regions of the country. The Commodity Weather Group said colder to much colder-than-normal weather is seen across the eastern half of the U.S. from April 23-27.
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 +18.9% above their 5-year seasonal average as of Apr 7.
Lower-48 state dry gas production on Tuesday was 98.7 bcf (+2.2% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Tuesday was 70.1 bcf/day, down -11.3% y/y, according to BNEF. On Tuesday, LNG net flows to U.S. LNG export terminals were 14.3 bcf, up +1.9% 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.
An increase in U.S. electricity output is bullish 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 8 rose +0.7% y/y to 71,516 GWh (gigawatt hours). Also, cumulative U.S. electricity output in the 52-week period ending Apr 8 rose +1.0% y/y to 4,109,905 GWh.
Last Thursday's weekly EIA report was slightly bullish for nat-gas prices since it showed U.S. nat gas inventories rose +25 bcf, slightly below expectations of +28 bcf. Nat-gas inventories are +18.9% 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.
