Natural Gas Update May 27,2025

Overview

July NG is down 1.6 cents versus Friday’s settlement

NG futures are near unchanged now after spending much of the prior 24 hours down versus Friday's settlement, as U.S. cooling demand for the week ending May 31 is forecast to be in line with the long-term normal, according to Bloomberg, citing the NOAA. The lack of strong weather demand is added to the recent spate of large storage injections that have weighed on the front end of the NG forward curve.

Celsius Energy says that gas storage inventories have topped 2500 BCF. This is 6 days sooner than the 5-year average (June 1) but 28 days later than last year (April 28).

U.S. domestic natural gas production is at 106.3 BCF/d today, which is the lowest since May 15, according to Bloomberg data.

Asia’s imports of LNG stagnated in May while Europe’s continued to ease as demand in both of the world’s top-importing regions entered the seasonal slump between winter and summer peaks. Compared to a year ago, Asia’s arrivals are down 4.5%, continuing the pattern of softer demand seen so far in 2025, as per a Reuters analyst.  For the first five months of the year Asia's LNG imports are down 6.2% from the same period in 2024. The slip in demand is attributed mostly to lower Chinese demand, as high spot prices have rendered LNG uncompetitive.  China’s LNG imports in May are seen at the weakest on a per day basis since March 2020, according to Kpler data. Prices above $10 per mmBtu are believed to make spot purchases uneconomic for the Chinese, according to the Reuters analyst. Friday's settlement in JKM futures for July delivery was $12.485. With China’s appetite limited, the question is why is the spot price rising from that seen in early May when it fell to near $11. The price rise may be driven more by supply than demand. Shipments from top regional supplier Australia dropped to a three-month low in May amid a reported outage at a major plant, while Malaysia’s exports slid to a nine-month low in May. Markets were also buoyed by reports that Egypt is seeking 40-60 LNG cargoes for the upcoming northern summer amid an energy crunch, which would likely suck some LNG away from Asian markets, especially from Middle East producers like Qatar and the United Arab Emirates.

European LNG demand has continued to ease in May, dropping by 4.4% in April, according to Kpler data. Europe’s intake has been dropping since reaching a 27-month high in March as the continent’s storages have been rebuilt. (Reuters) European inventories are seen at 46% of capacity at 1798 BCF. Inventories remain 18.4% / 405 BCF below the 5 year average and 32.4% / 863 BCF below year ago level. (Celsius Energy) Storage at this time last year was at 68.48% of capacity. (en.macromicro.me)

Today is the last trading day for the LN/NG June options. The nearby $3.25 strike had total open interest of 30,594 contracts as of Friday's close. The $3.00 strike had total open interest of 44,133 contracts, while the $3.50 strike had 49,521 contracts open.

The EIA gas storage data will be released at its usual time this week on Thursday at 10:30 EDT. Early estimates we have seen are calling for a build of 90 to 99.5 BCF. This compares to last year's build of 84 BCF and the 5 year average build of 98 BCF.

Technically, July NG futures have positive momentum. Resistance is seen at 3.754-3.758 and then at 3.831-3.837. The session high of 3.807 was seen at the opening on Sunday night. But, intraday charting shows prices basically were capped that night near 3.76. Support on the July daily chart comes in at 3.570-3.574 and then at 3.491-3.495.

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