FINWIRES · TerminalLIVE
FINWIRES

Mild Weather Pressures Power Demand as Natural Gas Rally Gains Momentum, EBW Analytics Says

By

Natural gas climbed 8.9% last week to $3.29 per million British thermal units as stronger spot prices, lower production and supportive weather lifted the July contract, EBW Analytics said Monday.

Milder weather across the Southeast and Mid-Atlantic and the Memorial Day holiday reduced electricity demand last week, cutting power-sector gas consumption by 2 billion cubic feet per day as stronger nuclear output added further pressure, EBW said.

Regional power markets moved in different directions as PJM West day-ahead on-peak prices fell $21 per megawatt hour from a week earlier to $36.82/MWh, while Indiana Trading Hub prices rose $11/MWh to $43/MWh on stronger heat, according to EBW.

In the West, prices in the California Independent System Operator market remained weak, ranging from $11/MWh to $16/MWh, EBW said.

Rising natural gas prices are making coal-fired generation more competitive, a shift that could cut gas demand by another 0.5 Bcf/d, according to EBW.

Cooler weather in the Electric Reliability Council of Texas and the Southeast may also limit any rebound in gas demand this week, with power-sector consumption expected to recover by only 1.1 Bcf/d, EBW said.

After holding above $3/MMBtu early in the last week, July natural gas futures settled at a nine-week high of $3.29/MMBtu on Friday, while Henry Hub spot gas traded at a 5-cent premium to the front-month contract at $3.34/MMBtu.

Weather forecasts turned slightly hotter over the weekend, adding six cooling degree days, while Cameron LNG remained offline for 32 days and could restart soon, EBW added.

Traders increased bearish bets to the highest level in 18 months, creating potential for additional buying if those positions unwind, while technical indicators continue to point to further near-term gains, EBW said.

Looking further ahead, EBW expects natural gas inventories to rise above 4 Tcf.

The firm projects a 103 Bcf storage injection for the week ended May 29 and forecasts end-of-June inventories at 2,645 Bcf to 2,670 Bcf.

EBW targets July natural gas at $3.41/MMBtu within a $3.14/MMBtu to $3.55/MMBtu range, while forecasting August at $3.19/MMBtu and September at $2.86/MMBtu as prices gradually ease.

July West Texas Intermediate crude fell 9.6% over the week to $87.37 per barrel after losing $9.24/bbl.

While hopes for a US-Iran agreement could pressure prices toward $80/bbl, EBW said supply disruptions exceeding 1 billion barrels and the continued closure of the Strait of Hormuz could keep oil markets tight through the summer.

Related Articles

Oil & Energy

US Natural Gas Update: Futures Fall on Ample Supplies, Weakened Demand

US natural gas futures declined in midday trading on Monday as strong domestic production, softer demand, and elevated inventories weighed on sentiment.The front-month Henry Hub contract dropped by 3.59% to $3.172 per million British thermal units, while the continuous contract lost 3.50% to $3.175/MMBtu.Traders brushed aside media reports on Iran's exit from US talks and the Strait of Hormuz risks, which had lifted European gas futures prices on Monday, and focused on modest domestic demand and ample supply.Demand weakened through last week before stabilizing at the start of the new week, according to NRG Energy.US consumption dropped from above 100 billion cubic feet per day to below 95 Bcf/d by Saturday, before recovering to nearly 100 Bcf/d on Monday. The decline was driven mainly by lower power burn and a modest dip in exports to Mexico.On the supply side, dry gas production rose 0.6 Bcf/d week over week, with output up 3.4 Bcf/d compared with the same period last year, NRG Energy said. Trading Economics reported that Lower 48 production averaged 109.4 Bcf/d in May, slightly below April's 109.8 Bcf/d.Last week, the US Energy Information Administration reported that stock levels were 144 Bcf, or 6%, above the five-year average for this time of year.LNG export flows were largely steady but eased over the past few days, mainly due to ongoing scheduled maintenance.Feedgas volumes held near 17.4 Bcf/d for most of the week before slipping to 16.9 Bcf/d over the weekend, NRG Energy said. Trading Economics noted flows to major US LNG export facilities averaged 17.1 Bcf/d in May, down from a record 18.8 Bcf/d in April.Despite the latest pullback, prices remain volatile after a sharp monthly swing. US natural gas futures surged 18.9% in May following a 4.1% decline in April, Trading Economics said.

Oil & Energy

Trump Says US-Iran Talks Ongoing at 'Rapid Pace'

US President Donald Trump said Monday that talks were progressing at a "rapid pace" with Iran, rejecting media reports that Tehran had suspended ongoing negotiations with the US."Talks are continuing, at a rapid pace, with the Islamic Republic of Iran," Trump posted on Truth Social.In a separate post, Trump said he had spoken with Israeli Prime Minister Benjamin Netanyahu and that Israeli forces would not enter Beirut, while claiming Hezbollah had agreed to halt attacks on Israel."I had a very productive call with Prime Minister Bibi Netanyahu, of Israel, and there will be no troops going to Beirut, and any troops that are on their way, have already been turned back," Trump said in a post on Truth Social.Trump added that he also had a "very good call" with Hezbollah through intermediaries and that the group agreed "that all shooting will stop," adding that "Israel will not attack them, and they will not attack Israel."The remarks came as efforts to secure a ceasefire between Israel and Hezbollah remained uncertain and amid conflicting reports over the status of Iran-US negotiations.Earlier in the day, Trump said that he had not been informed after Iran's negotiating team had reportedly decided to suspend talks and the exchange of messages through mediators, multiple news outlets reported, citing phone interviews with Trump."It's an appropriate thing to say, because they're better negotiators than they are fighters," Trump said in a brief phone call with NBC News, adding, "But they haven't informed us of that."Trump also said Iran's decision would not immediately trigger military action and added, "It doesn't mean we're going to go and start dropping bombs all over there."On the US maritime blockade, which he lifted on Friday, Trump reportedly said it will remain in force.In another phone interview with CNBC, Trump said he was not concerned about higher oil prices following reports that Iran could block the Strait of Hormuz and halt negotiations, adding that he expects oil prices to fall sharply in the near term.The White House didn't immediately respond to' request for comment.Earlier in the day, Iran reportedly suspended indirect talks with the US as tensions in Lebanon escalated.Iran's semi-official Tasnim news agency reported Monday that Tehran's negotiating team will suspend talks and exchanges of messages with the US through mediators in response to what it described as the crossing of red lines in Lebanon and Gaza.Iran's senior military officer Mohsen Rezaee posted on X on Monday that Iran controls the Strait of Hormuz and will not allow the continuation of the maritime blockade or any further escalation in Lebanon."The Strait of Hormuz is under Iran's management. We will not allow the continuation of the maritime blockade, and the escalation of tensions in Lebanon will not be tolerated either," the post read.Rezaee, a senior commander in Iran's Islamic Revolutionary Guard Corps, added that the patience of the Islamic Republic's armed forces has limits as regional tensions continue to rise.Israeli Prime Minister Benjamin Netanyahu said in a post on X on Monday that he had instructed the Israel Defense Forces to strike Hezbollah targets in Beirut's Dahiyeh district.Netanyahu said the order came in response to Hezbollah's "repeated and ongoing violations of the ceasefire in Lebanon" and attacks against Israeli cities and citizens.Meanwhile, Lebanon's Parliament Speaker Nabih Berri told the Trump administration that Hezbollah is prepared to accept a full and immediate ceasefire with Israel, Axios reported, citing Berri's top adviser Ali Hamdan.Hamdan said that Hezbollah would fully commit to a comprehensive truce and that Berri conveyed the position to US Ambassador Michel Issa on Sunday.Hamdan rejected a limited ceasefire proposal that would halt Hezbollah attacks on northern Israel in exchange for Israel refraining from striking Beirut.Instead, he called for a full ceasefire across land, air and sea, according to the report.Oil prices climbed in early trading on Monday, with Brent crude rising 4.1% to $94.86 per barrel and West Texas Intermediate futures advancing 5% to $91.76/bbl.

Oil & Energy

EMEA Oil Update: Crude Rallies After Iran Suspends Peace Talks with US

EMEA crude futures rallied in after-hours trading on Monday after reports that Iran has suspended peace negotiations with the US, stoking concerns over geopolitical stability in the Middle East and continued closure of the Strait of Hormuz.Brent crude futures climbed 6.83% to $97.27 per barrel, while Murban oil futures advanced 5.99% to $95.45/bbl.Saxo Bank strategists said crude prices rebounded from a six-week low amid ongoing uncertainty over the prospects for a peace deal to end the war with Iran.Iran reportedly will suspend indirect communications with the US, and its allied "Resistance Front" plans to completely block the Hormuz and choke other waterways, including the Bab el-Mandeb Strait.Foreign Minister Abbas Araghchi said that the truce agreement between the US and Iran applies to "all fronts, including in Lebanon," adding that a breach in one area constitutes a violation of the broader arrangement."The ceasefire between Iran and the US is unequivocally a ceasefire on all fronts, including in Lebanon," Araghchi said, adding that the US-Israeli alliance is responsible for the consequences of any violation.On Monday, President Trump said he had not been informed of Iran's decision to halt peace talks ahead of time, according to media reports."It's an appropriate thing to say, because they're better negotiators than they are fighters," Trump was quoted as saying. "It doesn't mean we're going to go and start dropping bombs all over there."Trump lashed out at critics on Monday amid ongoing heightened geopolitical tensions in the Middle East, saying that Tehran "really wants to make a deal" and that it will be a good one for the US.Scotiabank strategists said a prolonged geopolitical conflict involving Iran would tighten global oil markets and generate significant supply chain disruptions.Meanwhile, the US and Iran traded fresh strikes over the weekend, and Israeli Prime Minister Benjamin Netanyahu ordered troops to push deeper into Lebanon, developments that threaten a fragile ceasefire between Washington and Tehran.On Sunday, US Central Command said in a post on X that it had carried out strikes in Goruk and the island of Qeshm "in response to aggressive Iranian actions," saying Iran had shot down a US MQ-1 drone that was operating over international waters.Iran's Revolutionary Guard, on the other hand, said its aerospace force had targeted the source of what it called a US attack on a telecommunications tower on Sirik Island in Hormozgan province.Though Iran did not reveal its military target, Kuwait said in a post on Monday that its air defense systems intercepted and responded to missile and drone threats, without disclosing the origin of the attacks.