Natural gas contract is currently trading near $2.936 is sharply up from the recent low of $2.453 registered on Apr. 6, prices are likely to trade firm on colder than the expected temperature in the US which is likely to increase heating demand.
Natural gas prices also have carry-over support from robust export numbers from the last six months. The Global Forecast System sees colder-than-expected temperatures for the U.S from May 7-9 which is supportive of heating demand and natural gas prices.
Strong export demand is likely to provide support to NG prices. As per Bloomberg data, gas flows to US LNG export terminals on Tuesday rose +74% y/y to 11.5 bcf. on Apr 18.
Higher electricity output is supportive of NG prices. As per the Edison Electric Institute report, US electricity output in the week ended Apr. 17 rose +4.4% y/y to 66,881 GWh (gigawatt hours).
Additionally, US Gas production on Tuesday fell -2.0% y/y to 88.954 bcf/d which is supportive of gas prices.
However, weakness in domestic nat-gas demand is likely to cap the positive move in NG prices. As per Bloomberg data, NG domestic demand on Tuesday fell -3.2% y/y to 59.4 bcf.
NG prices to get fresh direction from weekly inventory report which is scheduled to release later tomorrow. As per the last report from EIA, inventories for the week ended Apr. 16 rose +38 bcf to 1,883 bcf, against expectations of a +47 bcf increase. However, inventories are down -12.0% y/y and are +0.6% above their 5-year average.
As per Baker Hughes report, the number of active US drilling gas rigs in the week ended Apr. 23 were unchanged at a 1-year high of 94 rigs, well above the record low of 68 rigs posted in July 2020.
Natural Gas prices are likely to trade firm while above the key support level of 20 days EMA of $2.704 and 100 days EMA of $2.671 while it may face stiff resistance around $2.991 and $3.104