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Markets

US natgas rises to fresh 9-wk high on record exports

  • On its last day as the front-month, gas futures for May delivery rose 2.4 cents, or 0.8%, to $2.897 per million British thermal units.
  • That increase kept the front-month in overbought territory with a Relative Strength Index (RSI) over 70 for a third day in a row for the first time since August 2020.
28 Apr 2021

US natural gas futures edged up to a fresh nine-week high on Wednesday on record exports and a small decline in production.

Traders also said colder-than-usual April weather last week likely boosted heating by so much that utilities may have taken the unusual step of pulling gas from storage. The last time utilities pulled gas from storage in April was in 2018.

With summer fast approaching, meteorologists forecast demand for air conditioning will exceed heating use over the next two weeks for the first time since autumn. Most parts of the country, however, will experience mild weather and use little air conditioning or heat during that time.

On its last day as the front-month, gas futures for May delivery rose 2.4 cents, or 0.8%, to $2.897 per million British thermal units at 9:11 a.m. EDT (1311 GMT), putting the contract on track for its highest close since Feb. 22.

That increase kept the front-month in overbought territory with a Relative Strength Index (RSI) over 70 for a third day in a row for the first time since August 2020.

Data provider Refinitiv said gas output in the Lower 48 US states slipped to an average of 91.3 billion cubic feet per day (bcfd) so far in April from 91.5 bcfd in March due to routine spring pipeline maintenance. That compares with a record monthly high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would slide from 89.4 bcfd this week to 86.8 bcfd next week as the weather turns milder. The forecast for this week was lower than Refinitiv projected on Tuesday.

The amount of gas flowing to US LNG export plants has averaged 11.5 bcfd so far in April, compared with a monthly record of 11.2 bcfd in March.

Buyers around the world continue to purchase record amounts of US gas because prices in Europe and Asia remain high enough to cover the cost of buying and transporting the US fuel across the ocean.

Traders, however, said that US LNG exports cannot rise much more until new units enter service in 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants pull in a little more gas than they export because some of the fuel is used to run the facility.

US pipeline exports to Mexico, meanwhile, averaged 6.05 bcfd so far in April, up from 5.87 bcfd in March and on track to top the monthly record of 6.04 bcfd in September 2020, Refinitiv data shows.

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