Natural gas prices increased by 1.45%, finishing at 146.5, on higher demand expectations for the next two weeks. This increase in demand comes against a backdrop of reduced output, with some energy companies reducing drilling activity and delaying well completions, resulting in a 3% decline in output over the last month.
In addition to supply-side dynamics, the spot market saw mild weather conditions and abundant renewable power supplies in the US West, contributing to record-low electricity costs in California and Arizona.
Despite these favorable conditions, US utilities took 36 billion cubic feet (bcf) of gas from storage for the week ending March 22, exceeding market expectations and demonstrating continued demand. However, gas reserves remain robust, with 2.296 trillion cubic feet (tcf), substantially greater than last year and above the five-year historical norm.
Despite the excess, gas output in the Lower 48 US states has fallen, with March averaging 100.2 billion cubic feet per day (bcfd), down from 104.1 bcfd in February. Meteorologists predict warmer-than-normal weather in the Lower 48 through April 12, which could impact natural gas demand dynamics.
