May Nymex natural gas (NGK23) on Monday closed up +0.161 (+8.01%).
May nat-gas prices Monday surged. Fund buying of nat-gas futures emerged near the key psychological support level of $2 per million British thermal units, pushing prices sharply higher. Nat-gas prices Monday rallied despite bearish fundamentals, as the Commodity Weather Group said above-normal temperatures are expected across the Midwest and Eastern U.S. this week, curbing heating demand for nat-gas.
Lower-48 state dry gas production on Monday was 99.9 bcf (+4.3% y/y), moderately below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Lower-48 state gas demand Monday was 69.2 bcf/day, unchanged y/y, according to BNEF. On Monday, LNG net gas flows to U.S. LNG export terminals was 13.9 bcf, up +0.1% w/w. On Mar 29, LNG net flows to U.S. LNG export terminals rose to a record 14.2 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.
Nat-gas prices have fallen sharply over the past three months and posted a 2-1/2 year nearest-futures low (NGJ23) last Wednesday as normally mild weather across the northern hemisphere erodes 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 U.S. Gas storage across Europe was 56% full as of Apr 2, far above the 5-year seasonal average of 35% full for this time of year. Also, U.S. nat-gas inventories were +19.5% above their 5-year average as of Mar 31.
A decline in U.S. electricity output is bearish 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 1 fell -0.9% y/y to 70,906 GWh (gigawatt hours). However, cumulative U.S. electricity output in the 52-week period ending Apr 1 rose +1.1% y/y to 4,109,436 GWh.
Last Thursday's weekly EIA report was neutral to bearish for nat-gas prices since it showed U.S. nat gas inventories fell -23 bcf, right on expectations. Nat-gas inventories are +19.5% above their 5-year seasonal average.
Baker Hughes reported last Thursday that the number of active U.S. nat-gas drilling rigs in the week ended Apr 7 fell by -2 to 158 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).
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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.
