May Nymex natural gas (NGK25) on Friday closed down by -0.030 (-0.84%).
May nat-gas prices on Friday posted moderate losses on concern the escalation of the US tariff turmoil will roil global trade and curb demand for US nat-gas supplies. On Friday, China raised tariffs on all US goods to 125% from 84% in retaliation for the US raising tariffs on Chinese goods to 145%.
A mixed US weather forecast also limits heating demand for nat-gas and weighs on prices. On Friday, the Commodity Weather Group said that temperatures shifted to above normal for the western US, while temperatures are expected to remain seasonal in the Midwest and East for April 16-20.
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 Friday was 106.2 bcf/day (+4.7 y/y), according to BNEF. Lower-48 state gas demand Friday was 76.7 bcf/day (+11.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 16.3 bcf/day (+9.1% 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 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.
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 7, versus the 5-year seasonal average of 46% full for this time of year.
Baker Hughes reported 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).
