U.S. Natural Gas Futures Tick Up Thursday Despite Extremely High Inventories

Quick overview

Natural gas prices moved up marginally on Thursday to $2.65 in what appears to be a market correction after several days of sharp decline.

There is an excess of natural gas in the United States, and with inventory levels high, the price remains below where it was at the same time last year. The suppressed rates have also been caused by an uncommonly warm winter season and high production levels of natural gas across the United States for most of the year.

Production is expected to rise over the coming months as gas facilities add more lines and expand their reach for the growing export market. U.S natural gas inventories are now at 103 billion cubic feet, which is much higher than the 93 billion cubic feet that was expected for this time of year.

Cooler Weather Not Expected to Help

Investors should not anticipate higher prices in the coming weeks based on cool weather reports. Those forecasts show that the weather may cool slightly, but the difference in temperature is not expected to be severe enough to warrant increasing the gas prices by any substantial amount.

Those cooler temperatures are anticipated for the end of this month and until the middle of May, but with inventories so high and demand still low, domestic natural gas prices should not move much. The overall trend we expect for LNG rates domestically is lower and lower into the summer season until there is a reprieve in fall as demand starts to grow.

EIA reports show that production slipped over the past 22 days, falling to 108.3 bcfd. That is a 12-week low and a decrease of 3.8 bcfd in that period. Despite that drop in production, prices remain low, and even the ongoing conflict in Iran is having little effect on domestic LNG rates. So long as domestic demand remains subdued and inventory levels are elevated, the price of natural gas should continue to stay below $2.70 per MMBtu.

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Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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