Natural Gas Update June 3,2025

Overview

NG is down 3.3 cents

Natural gas prices are down now with the lower feed gas volumes being seen as the culprit for the drop in futures prices. Prices rose overnight on the prospect for heat in some regions middle of the month. Lower production was also cited as supporting NG prices. Some short covering seems to have also occurred in the rally the past 24 hours.

Lower 48 natural gas demand is seen today at 68.4 BCF/d, which compares to the previous five-year average for this time of year of around 65.7 BCF/d, as per Bloomberg data.  Forecaster Atmospheric G2 said Monday that temperatures shifted hotter across large portions of the central and eastern US for June 12-16. (Barchart.com)

Pipeline flows currently show U.S. domestic natural gas production down 1.36 BCF/d on the day at 103.9 BCF/d today compared to an average of 106.35 BCF/d over the previous week, according to Bloomberg data. LSEG said average gas output in the Lower 48 U.S. states fell to 104.0 BCF/d so far in June, down 105.1 BCF/d in May and a monthly record high of 105.8 BCF/d in April. Analysts noted output data from early in the month was often revised. Energy traders said output reductions over the past month or so were primarily due to normal spring maintenance on gas pipelines.  (Reuters)

Total feed gas flows to U.S. LNG export terminals are down another 0.319 BCF/d today to the lowest since May 5 at 12.92 BCF/d, Bloomberg shows. Feed gas volume was seen averaging 15.1 BCF/d in May.  The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 14.1 BCF/d so far in June, down from 15.0 BCF/d in May and a monthly record high of 16.0 BCF/d in April. Energy traders said LNG feedgas reductions over the past month or so was primarily due to normal spring maintenance, including about three-weeks of planned work at Cheniere Energy’s 4.5 BCF/d Sabine Pass plant in Louisiana from around May 31-June 22. Gas flows to Sabine have held at a 23-month low of around 3.1 BCF/d since May 31. That compares with an average of 4.3 BCF/d over the prior seven days. (Reuters)

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 97.4 BCF/d this week to 99.9 BCF/d next week. These forecasts were up a total of 0.7 BCF/d from those seen Friday.

Early estimates for the EIA gas storage data for this week are calling for a build of 109 to 111.2 BCF. This compares to last year's build of 94 BCF and the 5 year average build of 98 BCF.

The notion of short covering being behind some of Monday's rally is corroborated by the CME open interest data, showing July open interest fell by 9,416 contracts.

Technically, NG has positive momentum basis the DC chart as today the spot futures price rose to its best value in 3 weeks. There is a double top from yesterday/today on the NG DC chart at 3.750/3.760.  Above that resistance lies up at 3.840. Support comes in at 3.608-3.613 and then at 3.527-3.531.

We have added an attached chart of NG on the DC basis, that to us suggests a possible inverted head and shoulders formation. The head lies down at the lows at the 3.11 area. The top of the formation lies at $3.84. This suggests to us that a break over the $3.84 high could see prices rise to near $4.50.

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