Nat-Gas Prices Fall on Forecasts for Warmer March | U.S. Markets

April Nymex natural fuel (NGJ25) on Friday closed down -0.100 (-2.54%).

April nat-gas on Friday dropped to a 1-1/2 week low and settled reasonably decrease on forecasts for above-normal temperatures subsequent month, which can curb heating demand for nat-gas.  Forecaster Maxar Applied sciences stated Friday that above-normal temperatures are anticipated from the Rockies to the Atlantic from March 10-14.  

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Nat-gas costs have been whipsawed over the previous week by climate elements and have consolidated beneath final Thursday’s 2-year high.  Nevertheless, nat-gas costs stay close to the highest of the February rally, which was pushed primarily by the stock drawdown attributable to the current cold climate.  As of February 21, EIA nat-gas inventories had been -11.5% beneath their 5-year average; the tightest provides have been in over 2-1/2 years.  

Decrease-48 state dry fuel manufacturing Friday was 107.8 bcf/day (+2.8 y/y), in accordance with BNEF.  Decrease-48 state fuel demand Friday was 80.2 bcf/day (-10.3% y/y), in accordance with BNEF.  LNG web flows to US LNG export terminals Friday had been 15.6 bcf/day (+2.1% w/w), in accordance with BNEF.

An increase in US electrical energy output is optimistic for nat-gas demand from utility suppliers.  The Edison Electrical Institute reported Wednesday that complete US (lower-48) electrical energy output within the week ended February 22 rose +19.9% y/y to 90,673 GWh (gigawatt hours), and US electrical energy output within the 52-week period ending February 22 rose +3.1% y/y to 4,230,167 GWh.

In a bullish longer-term issue for nat-gas costs, President Trump lifted the Biden administration’s pause on approving fuel export initiatives in January, thus shifting into lively consideration a backlog of about a dozen LNG export initiatives.  Bloomberg reported that the Trump administration is close to approving its first LNG export project, a Commonwealth LNG export facility in Louisiana.  Elevated US capability for exporting LNG would enhance demand for US nat-gas and assist nat-gas costs.

Thursday’s weekly EIA report was barely bearish for nat-gas costs since nat-gas inventories for the week ended February 21 fell -261 bcf, a smaller draw than expectations of -271 bcf however a bigger draw than the 5-year average draw for this time of 12 months of -141 bcf.  As of February 21, nat-gas inventories had been down -22.5% y/y and -11.5% beneath their 5-year seasonal average, signaling tight nat-gas provides.  In Europe, fuel storage was 40% full as of February 25, versus the 5-year seasonal average of 51% full for this time of 12 months.

Baker Hughes reported Friday that the quantity of lively US nat-gas drilling rigs within the week ending February 28 rose +3 to 102 rigs, modestly above the 3-1/2 12 months low of 94 rigs posted on September 6, 2024.  Lively rigs have fallen since posting a 5-1/4 12 months high of 166 rigs in Sep 2022, up from the pandemic-era document low of 68 rigs posted in July 2020 (knowledge since 1987). 

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