US natural gas futures have strengthened in the latter part of the week, driven by supportive storage data and a recovery in LNG export flows following seasonal maintenance, according to ING analysts Warren Patterson and Ewa Manthey [1]. The latest data from the US Energy Information Administration (EIA) showed that natural gas storage increased by 95 billion cubic feet (bcf) last week, which was below both the expected increase of 99 bcf and the five-year average increase of 101 bcf [1]. This lower-than-expected storage build provided a boost to natural gas prices [1].
Additionally, gas flows to LNG export plants have been picking up after maintenance, further supporting prices in the short term [1]. Despite these positive near-term developments, ING analysts judge the medium- to long-term outlook for Henry Hub natural gas prices as less constructive than before the Iran war [1]. They attribute this to increased oil drilling activity, which is expected to boost associated natural gas output and keep the US market relatively well supplied through 2027 [1].
Overall, while recent data and export trends have provided some price support, ING expects that rising associated gas production from oil drilling will weigh on the market over the coming years [1].
CONCLUSION
US natural gas futures have gained on the back of supportive storage data and recovering LNG exports. However, ING analysts anticipate that increased associated gas production from oil drilling will keep the US market well supplied through 2027, tempering the medium- to long-term price outlook.