US natural gas futures climbed above $3.75 per MMBtu in mid-May, reaching their highest level in a month, supported by strong demand prospects for LNG exports and expectations of robust domestic consumption.
Natural gas rise to one-month high
Weather forecasts from key meteorological agencies pointed to an intensifying North American summer heatwave, fueling projections of elevated gas demand for air conditioning in both residential and commercial sectors. This outlook has extended the rebound in prices that began earlier this month, as traders position for tighter summer balances.
Energy commodities also found additional support from improved geopolitical sentiment, after the White House and Beijing announced a temporary tariff reduction over the weekend. The US agreed to cut tariffs on Chinese goods from 145% to 30% for 90 days, while China reciprocated by lowering levies on US imports from 125% to 10%. The move reduced the immediate risk of an extended trade war, bolstering global economic confidence and improving the demand outlook for US LNG in Asia and Europe, where buyers are entering a critical restocking phase ahead of next winter.
Fundamentals remain mixed
The latest EIA data showed that US natural gas inventories in underground storage rose by 104 billion cubic feet (Bcf) last week, significantly above the five-year average build of 79 Bcf. The robust injection reflected lingering mild weather conditions and subdued demand for heating and cooling, temporarily easing concerns over tightness. As a result, the surplus versus the seasonal average widened to 30 Bcf. Nevertheless, inventories remain 412 Bcf below levels seen at this time last year, keeping market participants cautious over the potential for storage deficits if summer cooling demand accelerates or LNG exports remain strong.
Looking forward, traders will closely monitor updated weather forecasts, LNG export flows, and upcoming EIA storage reports to gauge whether the market will maintain its bullish trajectory into the summer cooling season.
