Prices for natural gas increased as demand surged and more gas flowed to LNG export facilities

Forecasts predicting higher demand over the next two weeks and increased flow to liquefied natural gas (LNG) export plants drove yesterday’s 0.21% increase in natural gas prices, which closed at 235.2. Prices jumped despite indications of heightened drilling activity and a notable excess supply in storage, underscoring the market’s susceptibility to supply dynamics and demand estimates.

The Lower 48 U.S. states’ gas output decreased a little from 98.2 billion cubic feet per day (bcfd) in April to 97.5 bcfd in May, but it was still less than the monthly record of 105.5 bcfd set in December 2023. But after plunging to a 15-week low in early May, daily output has somewhat increased, suggesting that drillers are responding to the current spike in futures prices.

Even with this increase, total U.S. gas production in 2024 was still about 8% less than in 2023 due to energy companies’ reduction in drilling and postponement of completions in response to early-year low pricing.

The Lower 48 states are expected to see warmer-than-normal weather, which is expected to fuel a rise in petrol demand. LSEG estimates gas consumption to stay at approximately 92.7 bcfd for the next two weeks, then gradually decline to 92.2 bcfd. The prediction for next week is a little bit higher than anticipated.

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