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June Nymex natural gas (NGM25) on Wednesday closed up by +0.158 (+4.45%).
June nat-gas prices settled sharply higher on Wednesday. Nat-gas prices rallied on expectations that US nat-gas exports are set to increase after Houston’s Freeport LNG export facility restarted following a power disruption at the plant on Tuesday. Increased exports would clear an inventory buildup from the shutdown.
Last month, nat-has prices tumbled to a 5-1/2 month nearest-futures low as the warm US spring weather dampened heating demand for nat-gas and allowed supplies to rebuild. NatGasWeather said last Wednesday that near-normal weather across the US through May 14 will keep demand for nat-gas light, allowing inventories to climb even more.
In March, 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 Wednesday was 104.3 bcf/day (+5.1% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 64.8 bcf/day (-6.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.7 bcf/day (-12.1% 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 May 3 rose +1.2% y/y to 74,373 GWh (gigawatt hours), and US electricity output in the 52-week period ending May 3 rose +3.7% y/y to 4,253,707 GWh.
The consensus is that Thursday’s weekly EIA nat-gas inventories will climb by +103 bcf for the week ended May 2, above the five-year average for this time of year of +79 bcf.
Last Thursday’s weekly EIA report was mixed for nat-gas prices since nat-gas inventories for the week ended April 25 rose +107 bcf, below expectations of +109 bcf but well above the 5-year average build for this time of year of +58 bcf. As of April 25, nat-gas inventories were down -17.8% y/y and +0.2% above their 5-year seasonal average, signaling adequate nat-gas supplies. In Europe, gas storage was 41% full as of May 5, versus the 5-year seasonal average of 51% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending May 2 rose +2 to 101 rigs, modestly above the 4-year low of 94 rigs posted on September 6, 2024. Active rigs have fallen since posting a 5-1/2 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).
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