Natural gas prices have gone absolutely nowhere in the past month as the market digests the incoming cooling demand projections. In our last update on May 19, we noted the following variables needed to push prices higher:
Weather catalyst, an obvious warmer-than-normal weather pattern is forming for mid-June (early June weather models will show this outlook).
Lower 48 gas production is remaining near ~109 to ~110 Bcf/d.
Recovery in LNG feedgas.
Competitive coal-to-gas economics.
Since the last update, natural gas storage injections have been in line with the 5-year average: +396 Bcf vs the 5-year average of +385 Bcf.
But with LNG gas exports starting to trend higher and net gas supplies moving lower y-o-y, the natural gas market has started to tighten providing a solid floor for prices, while giving bulls some upside potential in the event of warmer-than-normal weather.
In this piece, I will go over what I’m seeing in natural gas and where we are going.