Natural Gas News: EIA storage report anticipates 84 Bcf build.

James Hyerczyk
Published: May 23, 2024, 13:19 GMT+00:00

Key Points:

  • U.S. natural gas prices rise as traders await EIA storage report, expecting 84 Bcf build.
  • Natural gas futures continue to climb, hitting a four-month high on demand forecasts despite overbought technical conditions.
  • LNG export activity boosts market with Freeport LNG reaching an 11-month high in May.
Natural Gas News

In this article:

U.S. Natural Gas Prices Surge Ahead of EIA Storage Report

U.S. natural gas prices are climbing on Thursday in anticipation of the latest government storage report due at 14:30 GMT. Trading above the 200-day moving average, the market’s bullish sentiment is strengthening as traders prepare for updated inventory data. Analysts expect another weekly injection, projecting an 84 Bcf build, as summer cooling season looms.

At 13:07 GMT, Natural Gas Futures are trading $2.863, up $0.021 or +0.74%.

Storage and Inventory Data

Last week’s EIA report showed working gas in storage at 2,633 Bcf as of May 10, a net increase of 70 Bcf from the previous week. This level is 421 Bcf higher than the same period last year and 620 Bcf above the five-year average of 2,013 Bcf. The total working gas is well above the historical range, reflecting significant surplus.

Price Movements and Demand Forecasts

Natural gas futures surged by about 6% to a four-month high on Wednesday, bolstered by higher demand forecasts and increased LNG export activity. The June front-month contract on the New York Mercantile Exchange closed at $2.842 per mmBtu, a 6.4% rise. This marks the 14th consecutive day in technically overbought territory, a streak not seen since June 2016.

Supply and Production Insights

Gas output in the Lower 48 states averaged 97.3 Bcf per day in May, down from April’s 98.2 Bcf per day. The drop is substantial compared to December 2023’s record of 105.5 Bcf per day. However, daily output has increased by 0.7 Bcf since early May, possibly driven by a 63% price surge over three weeks, encouraging some drillers to ramp up production. Despite this, 2024 production remains around 9% lower than last year due to reduced drilling activities by firms like EQT and Chesapeake Energy.

LNG Export and Pipeline Updates

Flows to LNG export plants increased from an average of 11.9 Bcf per day in April to 12.7 Bcf per day in May, with Freeport LNG’s Texas plant reaching an 11-month high. Meanwhile, the Mountain Valley Pipeline’s completion has been delayed to early June, pushing back the previously targeted date.

Market Forecast

Given the robust demand forecasts, high LNG export levels, and a likely smaller-than-usual storage injection, the market outlook remains bullish. With summer approaching and consumption expected to rise, natural gas prices are likely to sustain their upward trajectory in the near term.

Technical Analysis

Daily Natural Gas

Natural gas futures are rising above the 200-day moving average at $2.759, establishing it as new support. Strong upward momentum might push prices to the psychological $3.00 level in the near term, with $3.462 as the intermediate target.

Trading below the 200-day moving average will signal initial weakness, while a drop through $2.609 will indicate a shift to lower momentum.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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