On Thursday, May Nymex natural gas closed at $2.632 per MMBtu, up 1.42% from the previous day. The increase followed a mixed U.S. weather forecast, prompting short-covering in futures. The Commodity Weather Group predicts cooler temperatures across the eastern U.S. through April 20, transitioning to warmer weather from April 21-25.
As of Thursday, U.S. dry gas production reached 110.7 billion cubic feet per day (bcf/day), a 3.3% year-over-year increase. Meanwhile, natural gas demand decreased to 70.0 bcf/day, a decline of 4.3% year-over-year. Recent projections by the EIA estimate dry gas production at 109.59 bcf/day by 2026, an upward revision from earlier estimates. Additionally, a severe attack impacting Qatar’s Ras Laffan Industrial City, which provides 20% of global LNG, may tighten global supplies and bolster U.S. exports.
Despite the price increase, the market faces headwinds from rising inventories, which increased by 59 bcf for the week ending April 10, outpacing the five-year average of 38 bcf. Currently, natural gas inventories are 6.7% higher year-over-year and 5.8% above the five-year average. As of April 14, European gas storage is only 30% full, compared to the seasonal average of 42%.
