With the market continuing to balance near-term oversupply against longer term bullishness, natural gas futures moved slightly lower at the front of the curve in early trading Tuesday.
The May Nymex contract was down 1.7 cents to $1.774/MMBtu at around 8:45 a.m. ET. June was off 1.7 cents to $2.048.
A recently updated outlook from Tudor, Pickering, Holt & Co. (TPH) modeled tighter balances for 2024 and 2025. This tightening reflects both lower supply this year and a more bullish timeline for the startup of pending LNG export facilities, namely the Plaquemines project, TPH analyst Matt Portillo said in a recent note.
TPH estimated roughly 3.85 Tcf in storage by the end of the 2024 injection season, with the potential for inventories to finish below the five-year average by March 2025 as new liquefied natural gas export demand ramps up.
The market would move “further into an undersupply over the first quarter of 2025 as subdued supply is juxtaposed against inflecting LNG demand as Plaquemines and Corpus Christi Stage 3 reach nameplate capacity and Golden Pass starts to ramp Train 1, reaching full capacity by 2Q2025,” Portillo said.
For now, the market finds itself carrying a hefty storage surplus, with Lower 48 inventories at 622 Bcf above the five-year average as of April 12, according to the U.S. Energy Information Administration (EIA).
Mixed shoulder season weather appears poised to keep that surplus stubbornly high even as production has pulled back.
Weather models saw modest degree day gains overnight but continued to advertise “light to very light” demand for natural gas for days five through 15 of the projection period, according to NatGasWeather.
Recent weather data “remained quite bearish” for Saturday through May 10 “as most of the U.S. experiences very nice highs of mid-50s to 80s, besides locally hotter 90s over Texas and the Southern Plains,” NatGasWeather said.
The surplus versus the five-year average is expected to increase with this week’s EIA report before shrinking toward 610 Bcf after accounting for chilly weather this past weekend and for the current week, according to the firm.
“Surpluses will then have the opportunity to increase May 1-15 unless hotter/colder trends show up soon,” NatGasWeather said.
