May Nymex natural gas (NGK25) on Thursday closed up +0.083 (+2.05%).

May nat-gas prices settled higher on Thursday after weather forecasts for the northern US shifted colder, which could boost heating demand for nat-gas.  Forecaster Atmospheric G2 said Thursday that forecasts turned colder for the northern US and West Coast for April 8-12.  Gains in nat-gas prices were muted on Thursday after weekly EIA nat-gas inventories rose +29 bcf, slightly above expectations of +28 bcf and well above the five-year average for this time of year of a -13 bcf draw.

Last month, nat-gas rallied to a 2-year high on signs that US nat-gas storage levels could remain tight ahead of the summer air-conditioning season.  BloombergNEF projects that US gas storage will be 10% below the five-year average this summer.

Lower-48 state dry gas production Thursday was 105.4  bcf/day (+3.1 y/y), according to BNEF.  Lower-48 state gas demand Thursday was 73.3 bcf/day (-10.5% y/y), according to BNEF.  LNG net flows to US LNG export terminals Thursday were 15.5 bcf/day (-2.1% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported last Wednesday that total US (lower-48) electricity output in the week ended March 22 rose +0.9% y/y to 72,289 GWh (gigawatt hours), and US electricity output in the 52-week period ending March 22 rose +3.55% y/y to 4,239,323 GWh.

In a bullish longer-term factor for nat-gas prices, President Trump lifted the Biden administration's pause on approving gas export projects in January, thus moving into active consideration a backlog of about a dozen LNG export projects.  Increased US capacity for exporting LNG would boost demand for US nat-gas and support nat-gas prices.

The consensus is that Thursday's weekly EIA nat-gas inventories rose +28 bcf, above the five-year average for the week ended March 28 for a -13 bcf draw.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended March 28 rose +29 bcf, a larger build than expectations of +28 bcf and well above the 5-year average draw for this time of year for a -13 bcf draw.  As of March 28, nat-gas inventories were down -21.5% y/y and -4.3% below their 5-year seasonal average, signaling tight nat-gas supplies.  In Europe, gas storage was 34% full as of April 1, versus the 5-year seasonal average of 45% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending March 28 rose +1 to 103 rigs, modestly above the 3-1/2 year low of 94 rigs posted on September 6, 2024.  Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).