Forecasts of Higher Demand and Gas Flow To Lng Export Plants Contribute To Natgas Gains

Natural gas prices surged by 4.65% yesterday to end at 225.2, on the back of increasing gas flows to liquefied natural gas (LNG) export plants and projections of higher demand for the next week. Notwithstanding, indications of heightened drilling activity, lower-than-anticipated demand this week, and apprehensions regarding the substantial excess gas in storage limited the price increase.

Lower 48 U.S. states’ average petrol output in May was 97.8 billion cubic feet per day (bcfd), slightly less than the record 105.5 bcfd set in December 2023 and down from April’s 98.2 bcfd. Despite this, since early May, daily output has climbed by roughly 1.4 bcfd, suggesting that some drillers have been motivated to raise production by the recent 58% spike in futures prices.

However, in 2024, U.S. gas output is still down around 8% as a result of companies like Chesapeake Energy and EQT delaying well completions and cutting back on drilling after prices fell to 3.5-year lows earlier in the year. Through the middle of June, most days in the Lower 48 states will continue to be warmer than average, with a few days coming close to normal, according to meteorologists.

For the week ending May 24, U.S. utilities added 84 billion cubic feet of gas to storage, surpassing projections of 77 billion cubic feet. This is the greatest build in more than a month. This is the eighth week in a row that seasonal storage has increased.

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