Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Vista Projects
Copper Tip Energy Services
Hazloc Heaters
Vista Projects
Copper Tip Energy
Hazloc Heaters

U.S. natgas edges up with big drop in rig count, forecasts for less output

English Español 简体中文 हिन्दी Português
These translations are done via Google Translate

U.S. natural gas futures edged up on Monday on expectations production will decline in coming weeks and months after the rig count dropped last week.

The small increase came despite a near 9% drop in oil prices and forecasts for milder weather and lower heating demand over the next two weeks than earlier expected.

On its first day as the front-month, gas futures for May delivery on the New York Mercantile Exchange rose 1.9 cents, or 1.1%, to settle at $1.690 per million British thermal units. That is still less than a dime over its $1.602 close on March 23, which was its lowest settle since September 1995.

Global oil benchmark Brent crude plunged to its cheapest in almost 18 years on Monday, while U.S. crude briefly tumbled below $20 per barrel, on growing fears the global coronavirus shutdown could last months and demand for fuel will decline further.

Looking ahead, gas prices in late 2020 and 2021 rose even more than the front-month on expectations demand will rise later in 2020 with the return of economic growth after governments loosen travel restrictions once the coronavirus spread slows.


The premium of futures for November over October , which traders use to bet on demand next winter, rose to its highest since August 2010 for a second day in a row.


Even before the coronavirus started to cut global economic growth and demand for energy, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely.

Analysts project gas stockpiles will hit an all-time high in 2020 as drillers keep producing record amounts of fuel even though demand is expected to slump.

U.S. gas production is expected to decline through the rest of 2020, however, as energy firms cut rigs. Last week, drillers cut oil rigs by the most in a week since April 2015 due to the coronavirus-related slump in economic activity. A lot of gas comes out of oil rigs in shale basins.

With the coming of spring-like weather, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would slide from an average of 97.9 billion cubic feet per day (bcfd) this week to 94.9 bcfd next week. That is much lower than Refinitiv’s forecast on Friday of 98.2 bcfd this week and 101.9 bcfd next week.

Share This:

More News Articles