On Thursday, April Nymex natural gas closed up 3.30% at +0.101 as European natural gas prices surged to a three-year high following reported damage to Qatar’s Ras Laffan Industrial City, the world’s largest natural gas export facility. Iran’s strikes damaged 17% of the facility’s LNG export capacity, which is expected to take three to five years to repair. This incident may decrease Middle Eastern natural gas exports, potentially increasing demand for U.S. supplies.
The U.S. weekly EIA report indicated a rise in natural gas inventories by 35 billion cubic feet (bcf) for the week ending March 13, significantly above the five-year average draw of 29 bcf. Additionally, U.S. dry gas production on Thursday was recorded at 112.3 billion cubic feet per day (+5.2% year-over-year), with demand reaching 83.4 bcf/day (+10.8% year-over-year). As of March 17, gas storage in Europe was only 29% full, compared to a five-year seasonal average of 41%.
Baker Hughes reported a modest increase in active U.S. natural gas drilling rigs, rising to 133, just below the recent 2.5-year high. Overall, the increase in domestic production and inventories may weigh on future natural gas prices despite recent geopolitical tensions affecting Middle Eastern supplies.
