-- Natural gas extended losses for a fifth straight week, while oil markets turned volatile amid shifting geopolitical and macro drivers, EBW Analytics said in a Sunday note.
Heating demand declined sharply, cutting about 21 gas-weighted heating degree days, though a near-term rebound could add back roughly 8 billion cubic feet per day of demand, according to the note.
Production has softened modestly, but spot pricing remains weak, with Henry Hub near $2.65 per million British thermal units and national averages around $1.48/MMBtu, the note added.
A growing storage surplus, projected to reach about 200 billion cubic feet above five-year norms by May, continues to weigh on medium-term gas fundamentals, EBW added.
Long-term technical support in the $2.50s per MMBtu, alongside lower production and strong liquefied natural gas demand, may help bolster prices, though any rebound could be limited by a growing storage surplus, EBW said.
Electricity demand edged lower due to milder weather, but reduced wind output and stronger regional loads lifted gas-fired power demand by about 0.8 billion cubic feet per day over the week.
Power prices were mixed, with PJM West near $60.10 per megawatt-hour, while Electric Reliability Council of Texas North fell to $24.66/MWh and California Independent System Operator SP-15 dropped to $1.88/MWh.
Crude markets remained volatile, with West Texas Intermediate prices briefly reaching $117.63 per barrel before falling sharply on ceasefire news, then stabilizing above prior levels, the analysis said.
Breakdowns in US-Iran talks and continued constraints in the Strait of Hormuz are expected to support oil prices, with further upside risks as supply disruptions persist, EBW said.
Iran's control over Hormuz limited tanker flows to about 12 to 16 vessels per day, while the US blockade of Iranian oil transiting Hormuz could remove another 1 million barrels per day to 1.3 million b/d from global supply, the note said.
Over 9 million b/d of Middle East output could remain offline in April, with partial offsets from China's reserve releases and rising US inventories, according to the note.
Looking ahead, natural gas is expected to remain under pressure as large storage builds and a growing surplus weigh on prices, though easing supply and improving seasonal demand may help limit downside, EBW said.
Electricity demand is expected to stay elevated above five-year averages, supported by underlying load growth, though strong renewable generation during the shoulder season may cap price upside across some regions.
Iran's continued control over the Strait of Hormuz, even during a ceasefire, signals that a full return to normal shipping may be difficult, with WTI holding in the mid-$90s suggesting a higher "new normal" for crude, EBW said.