NEW YORK: US natural gas futures were little changed on Tuesday, while analysts expect higher supply and a milder weather outlook to limit any near-term gains.
Front-month gas futures for May delivery on the New York Mercantile Exchange (NYMEX) edged up 1.4 cents, or 0.6%, to settle at $2.186 per million British thermal units (mmBtu), after rising by 8% in the previous session, driven by short covering.
“Prices will likely trade in a range due to lack of news on both the supply and demand side. The market continues to be over-supplied while April and May are not very big weather driven demand months,” said Robert DiDona of Energy Ventures Analysis.
“If we cycle out of the maintenance season faster than normal, it could be bearish for prices, but if maintenance season continue for longer, then market may not be over-supplied anymore,” DiDona added.
The US Energy Information Administration on Tuesday projected an increase in US natural gas production in 2023 in its Short Term Energy Outlook (STEO).
The EIA said dry gas production will rise to 100.87 billion cubic feet per day (bcfd) in 2023 and 101.58 bcfd in 2024 from a record 98.11 bcfd in 2022.
Data provider Refinitiv said average gas output in the US Lower 48 states has risen to 100.1 bcfd so far in April, up from 98.7 bcfd in March and compared with a monthly record of 100.4 bcfd in January.
“We still see the May contract trading range bounded largely by about $1.95 on the downside and $2.25 on the upside,” said Ritterbusch and Associates in a note.
“The expected expansion in the storage surplus, possibly through the rest of this month, is apt to be a bearish dynamic that this gas market will have difficulty ignoring.”
Climate ministers of the Group of Seven countries have backtracked for now on earlier language touting growing future demand for liquefied natural gas (LNG), instead noting there may be “considerable uncertainty” for consumption.
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