US Natural Gas Falls on Warmer Outlook, Growing Storage Surplus

By Julian Hast

US natural gas futures ended lower on forecasts showing warmer weather than previously expected in the eastern US, as well as market expectations that domestic stockpiles will increase relative to seasonally normal levels in the coming weeks as demand lowers moving into spring.

US gas storage levels, which were up by 14 billion cubic feet from the seasonal norm as of March 19, will move to a 155 bcf surplus by April 16, Eli Rubin, senior energy analyst at EBW Analytics Group, said in a Monday note to clients.

Looking further down the price curve, the October-January spread has rapidly expanded since the war broke out in the Middle East. High production levels continue to push down October prices. Meanwhile, geopolitical risk is boosting the contract for delivery in January, when the northeastern US imports liquefied natural gas to supplement its scarce pipeline capacity during cold weather, according to a report from Energy Aspects.

• Futures for May delivery settled -13.8c, or -4.6%, to $2.887/mmbtu on Nymex
• The October-January spread has widened to -$1.689/mmbtu from -$1.222/mmbtu before the start of the war

Weather:

• Forecasts shifted warmer in the eastern half of the US, with above-average temperatures expected from March 30-April 3 and April 9-13: Commodity Weather Group
• See WHUT for a map of latest 6-10 day weather forecast: NOAA

Daily BNEF Gas Data:

• Lower-48 dry gas production on Monday ~113.7 bcf/day, or +5.4% y/y
• Lower-48 total gas demand on Monday ~71.2 bcf/day, or +2.4% y/y
• Dry gas exports to Mexico on Monday ~6.6 bcf/day, or -4.3% w/w
• Estimated gas flows to LNG export terminals on Monday ~20.2 bcf/day, or +2.9% w/w

Gas Market News:

• Europe Gas Holds Gains After Trump Renews Threat on Iran Energy
• LNG WRAP: Asian Prices Face Upside Risk as Storm Tightens Supply
• European Gas Summer-Winter Spread Approaches Zero: BNEF Chart
• Trump Warns Iran of Escalation as US Troops Arrive in Region (1)

This story was produced with the assistance of Bloomberg Automation.

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