US natural gas futures climbed above $3.40 per million British thermal units (MMBtu), recovering from a sharp 4% decline last week that had pushed prices to a five-month low of $3.00 on April 22. The rebound appears to have been driven largely by technical buying, as market conditions showed signs of being oversold. This bounce occurred despite a backdrop of generally weak fundamental drivers, including robust domestic production and subdued weather-driven demand.
US natgas prices rebound past $3.4
Production remains elevated, with average natural gas output in the Lower 48 states reaching a new high of 106.5 billion cubic feet per day (bcfd) in April, surpassing the previous record of 106.2 bcfd set in March. Much of the increase is attributed to rising volumes from prolific shale basins, particularly the Permian Basin, where associated gas production from oil drilling continues to add to supply. The persistent strength in output has kept pressure on prices, especially in the absence of strong demand catalysts.
Weather forecasts suggest that above-normal temperatures are expected to persist across much of the United States through at least mid-May. This type of mild weather reduces demand for both residential heating and air conditioning, as the spring shoulder season typically results in the lowest energy consumption of the year. As a result, utilities have been able to inject more gas into underground storage, helping build inventories ahead of the peak summer demand season.
Storage up last week
However, a recent government report showed a smaller-than-anticipated storage build for the latest week, which helped temper some of the bearish sentiment surrounding excess supply. This surprise may have contributed to the market’s bounce, signaling that demand may be stronger than previously thought or that supply logistics are tightening in certain regions.
Adding to the bullish tone, liquefied natural gas (LNG) feed gas demand has shown signs of steady recovery. Average flows to US export terminals climbed to a record 16.0 bcfd in April, supported by increased shipments to Asia and Europe, where inventories remain below seasonal norms. A significant boost came from Venture Global’s new Plaquemines LNG facility in Louisiana, which has begun ramping up operations and contributed to the surge in export volumes. Strong international demand continues to support US LNG exports, providing a key outlet for surplus gas and offering some relief to domestic oversupply concerns.
