LNG - Reasons Behind Last Week's Rally in Natural Gas Prices | Benzinga
The U.S. Energy Department's weekly inventory release showed that natural gas supplies increased more than expected. The bearish inventory numbers notwithstanding, futures settled with a week-over-week gain on signs of production pullback, resurgence of LNG exports and robust summer demand.
To be precise, the fuel reached a 21-week high on Friday, after gaining some 30% in May — its best monthly performance since July 2022 — supported by an improved macro backdrop. Despite the spike, the space remains highly susceptible to unpredictable weather patterns, impacting prices and market stability.
At this time, we advise investors to focus on stocks like Coterra Energy (NYSE: CTRA) and Cheniere Energy (NYSE: LNG).
EIA Reports a Build Larger Than Market Expectations
Stockpiles held in underground storage in the lower 48 states rose 98 billion cubic feet (Bcf) for the week ended May 31, above the analyst guidance of a 90 Bcf addition. The increase compared with the five-year (2019-2023) average net injection of 103 Bcf and last year's growth of 105 Bcf for the reported week.
The latest increase puts total natural gas stocks at 2,893 Bcf, which is 373 Bcf (14.8%) above the 2023 level and 581 Bcf (25.1%) higher than the five-year average.
The total supply of natural gas averaged 105.1 Bcf per day, down 0.7 Bcf per day on a weekly basis, primarily due to a healthy pullback in dry production.
Meanwhile, daily consumption — at 95.5 Bcf — essentially remained unchanged from the previous week, as higher power and industrial generation were offset by a dip in residential/commercial usage and a decrease in Mexico exports.
Natural Gas Prices Still Finish Higher
Natural gas prices trended northward last week despite the higher-than-expected inventory build. Futures for July delivery ended Friday at $2.92 on the New York Mercantile Exchange, up some 12.8% from the previous week's closing. As a matter of fact, the commodity's resurgence over the past couple of months — 13% in April followed by ...