Last week, U.S. Natural Gas Futures settled at $2.937, down $0.308 or -9.49%.
Is Weak Seasonal Demand Setting the Stage for Bigger Builds?
The shoulder season is fully underway, with weather forecasts predicting highs in the 60s to 80s across much of the U.S. for the next two weeks. Thursday’s EIA report showed a +88 Bcf inventory build for the week ended April 18, far exceeding both the +75 Bcf consensus and the five-year average of +58 Bcf. Even though total gas stocks remain -20.2% lower year-over-year, the market is more focused on the pace of current injections rather than historical tightness.
Can Renewables and Production Strength Keep Oversupply in Place?
Robust wind and solar output further pressured gas demand, while Lower-48 dry gas production stayed elevated at 104.4 Bcf/d, up +3.8% year-over-year. Meanwhile, demand continues to slide, down -7% year-over-year to 66.8 Bcf/d. The imbalance between strong production and weaker consumption is reinforcing bearish sentiment, with little sign that producers are pulling back in a meaningful way despite low prices.
LNG Softens But Long-Term Outlook Remains Constructive
LNG exports, typically a major support pillar, fell -3% week-over-week to 15.3 Bcf/d. Although long-term prospects remain positive after the removal of regulatory hurdles for LNG projects, the current dip in feedgas flows is adding to the near-term oversupply story, giving traders little reason to expect immediate relief.
Could Higher Power Demand Offer a Lifeline?
One bright spot is electricity demand, which posted a +2.1% year-over-year gain for the week ending April 19, according to Edison Electric Institute. While not yet enough to shift the broader supply-demand imbalance, rising power sector gas burn offers a flicker of potential support as summer cooling season nears.
Market Forecast: Bearish Pressure Set to Continue
With production resilient, demand sluggish, and storage builds accelerating, the natural gas market is likely to remain under bearish pressure into early May. Unless significant heat emerges or production shows a sudden contraction, any price rallies should be treated as short-covering opportunities rather than a change in trend.