May Nymex natural gas (NGK25) on Thursday closed down by -0.002 (-0.06%).
May nat-gas prices on Thursday fell to a 2-1/2 month low and settled slightly lower. On Thursday, nat-gas prices were under pressure on forecasts for warm spring US temperatures that will curb heating demand and allow nat-gas inventories to rebuild. Forecaster Atmospheric G2 said Thursday that forecasts shifted warmer for the eastern two-thirds of the US for April 22-26. However, short covering emerged in nat-gas futures Thursday, and prices recovered almost all of their losses after weekly EIA nat-gas inventories rose +16 bcf, below expectations of+24 bcf.
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 Thursday was 105.6 bcf/day (+5.4 y/y), according to BNEF. Lower-48 state gas demand Thursday was 70.1 bcf/day (+2.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 15.5 bcf/day (-4.8% 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 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.
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 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).
