U.S. Natural Gas Prices Rise As LNG Exports Reach 7-Week High

U.S. natural gas futures (NGM22) rose more than 4% on Monday morning to $8.456 per MMBtu, as U.S. LNG exports reached a seven-week high to service LNG-thirsty Europe, according to Reuters.

Natural gas prices in Europe are roughly four times as expensive as U.S. natural gas—a ratio that has enticed many U.S. LNG players to export their product outisde the U.S. market.

The United States had 1,732 Bcf of working gas in underground storage as of May 13, according to the Energy Information Administration (EIA), which is 17 percent lower than this time last year and 15 percent lower than the five-year average.

According to Reuters, the amount of gas in U.S. storage has fallen below the amount in storage in Northwest Europe.

U.S. natural gas prices had fallen on Friday afternoon, as the market anticipated a slump in demand due to forecasts for cooler temperatures, and as the EU endorsed companies opening up special ruble accounts at Gazprombank to pay for Russian gas that would help Europe replenish its stockpiles before next winter.

The rise in natural gas prices in the United States this week comes as no surprise. The EIA has forecast that natural gas delivered to electric generators will average nearly $9 per MMBtu this summer between June and August.

Refinitiv is projecting that U.S. gas demand, including exports, would drop to 88 bcfd next week, from 89.4 bcfd this week—lower than what Refinitiv had projected as of last Friday.

For the month, Refinitiv data shows that gas flowing to U.S. LNG export plants rose 12.4 bcfd so far in May, compared to 12.2 bcfd last month—but lower than the 12.9 bcfd in March.

By Julianne Geiger for Oilprice.com

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