Natural Gas Update-05.01.25

Overview

Natural Gas-- NG is up 4.0 cents

NG spot futures are higher this morning as forecasts dial in a bit more cooling demand. NG's rise is also likely due to the prospect for crude production to drop in U.S. shale basins, thus curtailing associated gas production.

Production is already tailing off with Bloomberg data showing US domestic natural gas production at its lowest since Feb. 20. Production is down 2.88 BCF/d on the day to 103.2 BCF/d, and is down 2.94 BCF/d compared to the 30 day average.

Weather demand rising is seen as the GFS 6z 15day forecast is showing an addition of 15 CDDs and loss of 8 HDDs, confirming the above normal temperatures. (Market News)

Freeport LNG received FERC approval on April 30 to begin cooling down its final offline LNG storage tank and related equipment at its Texas export facility, Platts said. This approval is a step toward full operational restoration following a June 2022 explosion and fire. Additionally, this week Golden Pass LNG Terminal LLC has received federal approval to move forward with commissioning several major systems at its export facility. The commissioning of these systems marks a major milestone toward full operational capability. (ABC12newsnow.com)

The EIA gas storage data for this week is seen as a build of 106 to 110 BCF, as per news wire surveys. This compares to last year's build of 64 BCF and the 5 year average build of 58 BCF. A triple digit injection would be the first such since May of 2023. The projected injection today will thus flip the deficit to the 5 year average to a surplus.

NG futures open interest on the CME rose by 17,400 contracts in Wednesday's trading. Large increases were seen in the July, September, November and December contracts. We lean to the open interest increase being more so new length rather than shorts, given that the price pattern seen during the day was more of an upward than downward one.

One interesting notable trade seen in NG options yesterday on the CME was in the January February spread CSO. Size traded in the 15 cent/25 cent/35 cent put option butterfly at a price of 1.6 cents. The trade was done with a reference price of 30.2 cents for the underlying futures spread.

Technically NG has positive momentum basis the DC chart. Support for the spot futures is seen at the prior 2 sessions' lows at 3.307-3.313 and 3.260. Resistance is seen at 3.457-3.462. Above that resistance comes in at 3.576-3.583.

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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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