What’s going on here?
US natural gas futures have surged to a peak of $3.698 per million Btu for June delivery – their highest since April 9 – thanks to lower output and robust demand expectations.
What does this mean?
The climb in US natural gas futures to a one-month high indicates a market shift driven by lower production and rising demand. In April, US LNG export feedgas and production reached new heights, but May saw the Lower 48 states’ output slip from 105.8 bcfd to 103.4 bcfd. While gas storage levels are 3% above the five-year average, benefiting from mild weather, maintenance at key plants like Cameron LNG in Louisiana and Cheniere Energy’s Corpus Christi in Texas, along with a brief Freeport LNG outage, contribute to the price uptick. Analysts predict a potential 15% drop in US crude oil futures in 2025 might cut associated gas production further, pushing prices up. LSEG estimates a temporary dip in gas demand to 95.5 bcfd next week, with a rebound to 98.2 bcfd likely.
Why should I care?
For markets: Reading the temperature of futures.
As US natural gas prices reach a one-month high, investors focus on production trends and demand outlooks. This price rise suggests profit potential, with market players anticipating volatility. Though storage remains ample due to mild weather, maintenance-related output limits at major plants might keep prices strong in the short term.
The bigger picture: Global gas markets under watch.
Globally, benchmark prices at $11.55 at TTF and $11.45 at JKM surpass US levels, illustrating varied regional dynamics. US trends could shape global supply chains, as analysts warn that a future rise in gas prices, sparked by anticipated falls in crude oil futures, could affect global energy strategies.
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