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Commodity Prices · Energy Markets · LNG · Natural Gas
May Nymex natural gas (NGK26) prices closed up +0.39% on Monday, recovering from a 7.25-month low as colder US weather forecasts across the Upper Midwest through April 10 drove increased heating demand, while global LNG supply concerns also provided support.
Short covering emerged in natural gas futures due to these colder US temperatures, as reported by the Commodity Weather Group. Medium-term support for prices stems from tighter global LNG supplies, specifically Qatar's report of "extensive damage" at its Ras Laffan plant, impacting 17% of its LNG export capacity with a 3-5 year repair timeline.
The closure of the Strait of Hormuz also curtailed supplies to Europe and Asia, which boosts US natural gas exports. However, bearish factors include high US dry gas production, which BNEF reported at 110.4 bcf/day (+2.8% year-over-year) on Monday, near a record high.
The EIA raised its 2026 US dry natural gas production forecast to 109.97 bcf/day. US demand was 72.9 bcf/day (-6.8% year-over-year) according to BNEF.
LNG net flows to US export terminals were 20.4 bcf/day (+1.7% week-over-week) as per BNEF. The Edison Electric Institute reported US electricity output rose +5.7% year-over-year in the week ended March 28.
Last Thursday's EIA report was bearish, showing natural gas inventories rose by +36 bcf, exceeding the 5-year weekly average draw of -4 bcf, signaling ample supplies. Inventories were up +5.2% year-over-year and +3.0% above their 5-year seasonal average.
Baker Hughes reported active US natural gas drilling rigs rose by +3 to 130, below the 2.5-year high of 134 rigs from February 27.
Liquefied natural gas’s reputation as a secure and affordable fuel is taking a hit.
