On Friday, June Nymex natural gas closed down by $0.111, or 3.68%, hitting a one-week low due to forecasts for cooler weather across the U.S., which are projected to reduce air-conditioning usage and nat-gas demand. The Commodity Weather Group indicated that normal seasonal temperatures are expected until May 31.
U.S. dry nat-gas production reached 110.1 billion cubic feet per day (bcf/day) on Friday, up 1.9% year-over-year, while demand declined to 69.1 bcf/day, down 3.9% year-over-year. EIA inventories showed a 101 bcf increase for the week ending May 15, exceeding both expectations and the five-year average, signaling ample supply in the market.
Despite the current price drop, some medium-term support exists due to disruptions in global LNG supplies, including a reported 17% capacity damage at Qatar’s Ras Laffan plant, which supplies about 20% of global LNG. The ongoing closure of the Strait of Hormuz due to geopolitical tensions could also boost U.S. nat-gas exports as Middle Eastern supplies are curtailed.
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