April Nymex natural gas (NGJ23) on Monday closed down -0.115 (-4.92%).
Apr nat-gas prices Monday dropped to a 3-week low as the outlook for milder temperatures will reduce the heating demand for nat-gas and allow stockpiles to build. Forecaster Atmospheric G2 said that above-normal temperatures are seen across much of the southern and eastern U.S. from March 25-29. In addition, a decline in European nat-gas prices Monday to a 19-month weighed on U.S nat-gas prices.
Lower-48 state dry gas production on Monday was 99.7 bcf (+5.3% 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 89.8 bcf/day, up +33.9% y/y, according to BNEF. On Monday, LNG net flows to U.S. LNG export terminals were 13.3 bcf, up +3.3% w/w. On Mar 3, LNG net flows to U.S. LNG export terminals rose to a record 14.1 bcf/day as nat-gas exports restarted from the Freeport LNG terminal as the terminal was 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 2-1/4 year nearest-futures low on Feb 22 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 Mar 13, far above the 5-year seasonal average of 36% for this time of year. Also, U.S. nat-gas inventories were +23.7% above their 5-year average as of Mar 10, the most in more than 6-1/2 years.
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 Mar 11 fell -1.7% y/y to 73,813 GWh (gigawatt hours). However, cumulative U.S. electricity output in the 52-week period ending Mar 11 rose +1.1% y/y to 4,102,283 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since it showed U.S. nat gas inventories fell -58 bcf, less than expectations of -61, and a much smaller draw than the 5-year average draw of -77 bcf for this time of year. Nat-gas inventories are now +23.7% above their 5-year seasonal average, the most in over 6-1/2 years.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended Mar 17 rose +9 rigs to a 6-month high of 162 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).
More Natural Gas News from Barchart
- Crude Prices Fall as Banking Turmoil Undercuts Economic Growth and Energy Demand
- Nat-Gas Prices Sink on the Outlook for Milder U.S. Temps
- Crude Prices Slump on Concern Bank Turmoil Will Spark Recession
- Nat-Gas Prices Climb on Forecasts for Colder U.S. Weather
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.
/Unitedhealth%20Group%20Inc%20HQ%20photo-by%20jetcityimage%20via%20iStock.jpg)
/Apple%20Inc%20phone%20and%20data-by%20Anderson%20Reis%20via%20Shutterstock.jpg)