May Nymex natural gas (NGK25) on Wednesday closed up by +0.015 (+0.50%).

May nat-gas prices posted moderate gains on Wednesday as forecasts for cooler US temperatures sparked some short-covering in nat-gas futures.  Forecaster Atmospheric G2 said Wednesday that forecasts shifted cooler across much of the central and stern US for April 28-May 2, which could boost heating demand for nat-gas.

On Tuesday, nat-gas prices sank to a 5-month nearest-futures low as warmer-than-normal US spring temperatures reduced heating demand and bolstered US nat-gas inventories.

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 Wednesday was 104.6  bcf/day (+4.6 y/y), according to BNEF.  Lower-48 state gas demand Wednesday was 64.7 bcf/day (-3.6% y/y), according to BNEF.  LNG net flows to US LNG export terminals Wednesday were 15.7 bcf/day (+1.2% 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 April 12 rose +6.4% y/y to 73,420 GWh (gigawatt hours), and US electricity output in the 52-week period ending April 12 rose +3.7% y/y to 4,247,718 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 will climb by +70 bcf, above the five-year average for this time of year of +58 bcf.

Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended April 11 rose +16 bcf, below expectations of +24 bcf and below the 5-year average draw for this time of year of +50 bcf.  As of April 11, nat-gas inventories were down -20.9% y/y and -3.9% below their 5-year seasonal average, signaling tight nat-gas supplies.  In Europe, gas storage was 37% full as of April 21, versus the 5-year seasonal average of 48% full for this time of year.

Baker Hughes reported last Thursday that the number of active US nat-gas drilling rigs in the week ending April 18 rose +1 to 98 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).