With the official arrival of Spring, the narrative for the natural gas markets remain relatively tame. Natural gas storage levels remain at a surplus. Natural gas on the NYMEX (New York Mercantile Exchange) settled at an average of $1.62 for the month of March which is at about a 20-year low. Check out below some of the factors that are impacting natural gas prices this month. 

Bull Factors:

 – Natural gas production continue to trend downwards as producers highlight the oversupplied marketplace. S&P Global Commodity Insights reported that the
production of dry natural gas saw a decline of 0.4%, averaging 101.0 Bcf/d (billion cubic feet per day).

– As of Tuesday, March 19, it was reported that by the Energy Information Administration (EIA) that there was a decline of 4 natural gas rigs, bringing the total to 112. This included a reduction of four rigs in the Haynesville area, a decrease of one rig in the Marcellus, and an addition of one rig in various unspecified production regions. Natural gas rigs are the rigs where natural gas is extracted from the Earth, as rigs count fall this can indicate a trend where the market is cutting its production to address record low prices. 

Bear Factors: 

 – Natural gas storage levels still remained at a surplus. For the week concluding on March 15, 2024, the underground storage levels of natural gas stood at 2,332 billion cubic feet (Bcf). Inventory levels exceed the five-year average by 678 Bcf and is 411 Bcf higher compared to the corresponding period last year. 

– Preliminary data from the EIA  indicated that U.S. exports of liquefied natural gas (LNG) in February decreased by 7% compared to January. This decline was attributed to a month-long shutdown at the Freeport LNG facility in Texas and the shorter length of February. LNG export levels have tailored off its record levels for now but do expect to ramp back up once the Freeport LNG facility opens up in May. With less shipping overseas, domestic supply of natural gas continue to remain bloated. 

 Neutral Factors: 

– One would expect Spring to bring warmer weather nation wide, yet forecasts are mixed. Colder air is expected to pass through the northern US while warmer temperatures are expected to move up the East coast from the South. 

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