US Natural Gas Futures Soar Past 2-Week High Amid Over 8% Jump

Key Moments:

Futures Climb on Bullish Forecasts

US natural gas futures skyrocketed by 8.42% on Wednesday, climbing above the $3.680 mark. The rally was driven by declining production, along with higher anticipated demand for next week and projections of unusually high summer temperatures that are projected to boost gas use for power generation.

Seasonal Shifts, Production Trends, and Maintenance Activity

Energy companies were expected to inject almost average volumes of gas into storage last week as strong cooling demand offset weaker heating needs. This followed five weeks of higher-than-usual injection activity.

According to LSEG, the Lower 48 states witnessed average gas production in May dip to 105.0 bcfd. The figure marks a notable drop from April’s 105.8 bcfd. On Wednesday, daily figures showed a preliminary output drop to a two-month low of 103.7 bcfd. Routine pipeline maintenance, including a turbine replacement by Kinder Morgan at its Permian Highway pipeline, was seen as the main factor behind the recent decrease in output.

Weather and Demand Expectations, LNG Feedgas Levels Ease

According to weather forecasts, temperatures across the continental US are expected to generally stay above the usual figures through June 12th. In addition, LSEG expects gas demand to decrease slightly from 96.1 bcfd this week to 95.7 bcfd next week. This estimate takes exports into account.

When it comes to LnG feedgas levels, the average volumes of gas directed to the US’s eight major LNG export terminals dropped to 15.1 bcfd this month. This drop was also attributed to maintenance, particularly the operations at Louisiana’s Cameron LNG. Construction work at Cheniere Energy’s Corpus Christi facility and Louisiana-based Sabine Pass also played a role.