May Nymex natural gas (NGK25) on Monday closed down by -0.229 (-7.06%).
May nat-gas prices plunged to a 2-3/4 month low on Monday and settled sharply lower. Forecasts for warmer US temperatures that curb heating demand and allow inventories to rebuild are weighing on nat-gas prices. Forecaster Atmospheric G2 said Monday that temperatures in the eastern half of the US will be well above normal for April 26-30. Losses in nat-gas prices accelerated Monday after prices fell below the 200-day moving average, triggering technical selling.
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 106.8 bcf/day (+6.9 y/y), according to BNEF. Lower-48 state gas demand Monday was 65.9 bcf/day (-7.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 15.0 bcf/day (-5.6% 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 12 rose +6.4% y/y to 73,420 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 12 rose +3.7% y/y to 4,247,718 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 bullish for nat-gas prices since nat-gas inventories for the week ended April 11 rose +16 bcf, below expectations of +24 bcf and below the 5-year average draw for this time of year of +50 bcf. As of April 11, nat-gas inventories were down -20.9% y/y and -3.9% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 36% full as of April 15, versus the 5-year seasonal average of 47% full for this time of year.
Baker Hughes reported last Thursday that the number of active US nat-gas drilling rigs in the week ending April 18 rose +1 to 98 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).
