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US Natural Gas Update: Prices Jump as Cooling Demand Begins to Dominate

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US natural gas futures climbed in midday trading on Monday, driven by expectations of stronger cooling demand as warmer weather is forecast across parts of the country.

The front-month Henry Hub natural gas and the continuous futures contract both climbed 5.55% to $2.91 per million British thermal units.

NatGasWeather.com projected temperatures in the 90s Fahrenheit and even triple-digit readings across parts of the Southern US.

Trading Economics said temperatures elsewhere are still expected to track normal seasonal patterns through May 23, with cooling demand gradually overtaking late-season heating demand.

EBW Analytics added that forecasts have increased the outlook by 12 cooling degree days for May, supporting near-term sentiment, though it cautioned it is still too early for a sustained pre-summer rally.

On the supply side, Trading Economics said a recent decline in US output supported prices, noting that production in the Lower 48 has been trending lower as producers such as EQT (EQT) curtailed output amid weak spot prices. However, output may be recovering as NRG Energy said production rose over the weekend to 107.5 billion cubic feet per day, up from about 106 Bcf/d in recent weeks.

EBW Analytics also said output has rebounded in the Marcellus and Permian, reinforcing expectations for stronger storage builds into early summer, while warning that heavy speculative short positioning leaves the market vulnerable to weather-driven upside.

Demand eased over the weekend, with NRG Energy reporting residential and commercial heating demand fell from 18 Bcf/d to 13 Bcf/d, while other segments held steady.

EBW Analytics expects heating demand to drop sharply over the next two weeks, increasing the risk of triple-digit weekly storage injections into late May and June.

Trading Economics said the storage surplus has likely narrowed to about 6% above seasonal norms for the week ended May 7, down from 7% the prior week, reflecting lower production and near-normal weather.

EBW Analytics warned that weaker late-May demand could drive unusually large injections, potentially pushing inventories more than 200 Bcf above five-year averages.

EBW Analytics said LNG feedgas has fallen about 2.5 Bcf/d from April highs due to maintenance at key facilities, including Cameron LNG, Corpus Christi, and softer flows at Sabine Pass.

Price: $56.68, Change: $+0.72, Percent Change: +1.29%

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$CRK