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US Natural Gas Update: Futures Climb on Rising Cooling Demand, LNG Restart

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Natural gas futures extended gains in after-hours trading Monday, rising more than 6% as rising cooling demand and the restart of an export terminal tightened market balances.

Both the front-month Henry Hub contract and the continuous contract rose by 6.31% to $2.931 per million British thermal units.

Cooling demand continued to drive consumption forecasts higher, Gelber & Associates said in a Monday note, adding that updated forecasts raised the 1-15 day temperature outlook by 11.5 degrees Fahrenheit. Aegis Hedging said most of the forecast increase was concentrated in the six- to 10-day period, when average temperatures are expected to exceed 70 degrees Fahrenheit for the first time later this week.

The National Oceanic and Atmospheric Administration also forecast well-above-normal temperatures across the eastern half of the US for May 18-24.

Gelber said power burn expectations for May increased by another 1 billion cubic feet per day to 33 Bcf/d from the current 32 Bcf/d, while residential and commercial demand is expected to decline to around 14.6 Bcf/d next week.

On the supply side, Trading Economics said a recent decline in US output supported prices, noting that Lower 48 production has trended lower as producers, including EQT, curtailed output amid weak spot prices. Aegis Hedging estimated that 200 million to 400 million cubic feet per day of Permian gas remains shut in because of weak pricing conditions.

Output, however, may be recovering. NRG Energy said production rose over the weekend to 107.5 Bcf/d, up from roughly 106 Bcf/d in recent weeks.

BNEF data showed LNG net flows to US export terminals were 17.7 Bcf/d on Monday, down 0.6% from the previous week.

The weekend restart of an LNG train also helped tighten supplies. Freeport LNG increased natural gas intake on Saturday and Sunday after one of its three liquefaction trains shut on Friday because of a compressor issue, Reuters reported, citing LSEG data. Gas flows to the plant fell to 1.4 Bcf/d on May 8 before recovering to about 1.9 Bcf/d between May 9 and May 11, roughly in line with the previous week's average.

Vortexa said US LNG exports remained steady despite scheduled maintenance at the Cameron and Corpus Christi terminals. Total US export volumes reached 2.5 million metric tons, or 36 cargoes, in line with the four-week average.

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