Natural Gas News – Natural gas futures fall 9.75% from a four-month high as drillers increase production, despite lower-than-expected storage injections from the EIA.
Natural gas futures fell about 7% on Thursday, retreating from a four-month high. This decline was mainly attributed to signs that high prices have incentivized drillers to increase production. Despite the drop, a federal report revealed lower-than-expected gas storage injections. The U.S.
Texas energy demand sets a new record in May, fueled by a heat wave, and expectations will rise even further over Memorial Day weekend.
Overnight power prices in Palo Verde and SP-15 remain negative, reflecting a recurring trend in 2024 in Texas, Arizona, and California.
Energy Information Administration (EIA) reported an addition of 78 billion cubic feet (bcf) to storage for the week ending May 17, below the 85 bcf forecast and the average five years of 91 bcf. However, storage levels remain 29% above the seasonal norm.Natural Gas News
Natural Gas News
In Texas, energy consumption was on track to set a new record for May due to a heat wave, which could intensify over the Memorial Day weekend. This increase in electricity demand is driven by the increased use of air conditioning. At the same time, US government meteorologists have forecast an “extraordinary” Atlantic hurricane season in 2024, which could further influence energy supply and demand dynamics.
In the spot market, overnight power prices in central Palo Verde in Arizona and South Path-15 in Southern California remained negative for a second day this week. Negative pricing has been a recurring theme in 2024, especially in Texas, Arizona & California. Palo Verde prices have averaged below zero 16 times this year, while SP-15 prices have reached negative territory 13 times, a stark contrast to previous years.Natural Gas News
Supply & Demand Factors
According to financial firm LSEG, natural gas production in the lower 48 states has averaged 97.4 bcfd per day so far in May, down from 98.2 bcfd in April and significantly below the record. December 2023 of 105.5 bcfd. However, daily production has increased by about 0.9 bcfd since early May as higher futures prices encouraged more drilling. Despite this rebound, overall production will decline by around 8% in 2024 due to previous cuts made by large producers such as EQT and Chesapeake Energy.Natural Gas News
