U.S. Natural Gas Prices Remain Stagnant
As we march on into the shoulder season, U.S. natural gas prices have remained stagnant, not moving over the past week
These boring times for the NYMEX gas market have really lingered since the end of January.
For example, prices in January varied by nearly 80 cents, or 28%. Since then, prices have varied by just 33 cents, or 13%.
We now have the lowest gas prices since mid-February.
In contrast, oil prices are up nearly 20% since the end of January.
For 2019 so far, U.S. gas production has been at 86 Bcf/d, versus 78 Bcf/d for year-ago levels.
This has compensated for higher demand, at 106 Bcf/d this year, against 100 Bcf/d last year.
It has been a warm start to April, especially as compared to last April, its coldest in nearly 25 years.
Gas heating demand this month has averaged 30% lower than it did this time last April. The first three weeks of April 2018, for instance, were all withdrawals from inventory.
We had our first injection into storage reported last week (+ 23 Bcf), signaling the beginning of the “summer gas market.”
The U.S. now stands at 31% below the five-year average for gas inventories, with all U.S. regions at least 23% below normal.
Back in early-January, the national deficit was only 11%.
The current deficit is 505 Bcf, or over six days of current demand.
Stay tuned but this could eventually lead to a price spike like we saw in mid-November when gas prices nearly hit $5, their highest level since 2014.
Forecast trends have been shifting back-and-forth but NOAA calls now appear pretty average.
Although maybe not: “Winter storm warnings and watches stretch from the Rockies to the Great Lakes.”
For the next two weeks, injections stand at 44 Bcf and 97 Bcf, well above their five-year corresponding averages of 5 Bcf and 21 Bcf.
Sunken Permian prices that have been well into the negatives recently could encourage storage operators to buy more gas as well.
Spot prices at Waha hub last week were easily their lowest ever at – $3.38.
Also of note, LNG exports, the largest and most interesting new U.S. demand market in the years ahead, have been falling, with a warm winter and stockpiling in Asia keeping international prices lower.
In fact, U.S. LNG feedgas demand has dropped some 40% since early-January, although year-to-date totals are still over 40% higher than this time last year (see Figure below).
Looking forward, the RSI has been in the low-40s to low-50s range, indicating a lack of market momentum in either direction.
It would indeed be extremely bearish if we dropped below the persistent support level of ~$2.55, which has served as a strong floor for a few years now.
This though would take plunging through technical support at both $2.67 and $2.61.
And until we can pass resistance $2.75, the move down still hovers over the market.
Currently, gas prices are right where they were this time last year.
Remember that in 2018 we broke $3.00 only once in the summer, averaging $2.88 for June through August
Summer 2019 U.S. natural gas prices have a real shot to repeat the summer 2018 range of $2.72 to $3.02.