Natural gas prices bounced from the recent low of $2.453 registered on Apr. 6 and now stand at $2.757 on the backdrop of strong export demand and dipping temperature in the US which has increased heating demand.
Recent cold US temperatures have boosted domestic heating demand for natural gas. However, the upside for natural gas prices in the near term may be limited after the Weather Company on Thursday said that recent cold temperatures are expected to dissipate quickly next week.
As per Bloomberg data, NG demand in the US on Thursday rose +10.5% y/y to 73.5 bcf. An increase in domestic demand is supportive of NG prices.
US natural gas prices are also receiving support from increasing export demand. As per Bloomberg data, gas flows to LNG export terminals on Thursday rose +37% y/y to 11.1 bcf.
An increase in U.S. electricity output is also positive for NG prices. US electricity output in the week ended Apr. 17 rose +4.4% y/y to 66,881 GWh (gigawatt hours). Also, gas production on Thursday fell -3.8% y/y to 87.793 bcf/d which is supporting NG prices.
US NG inventories for the week ended Apr. 16 rose +38 bcf to 1,883 bcf, below expectations of a +47 bcf increase. Inventories are down -12.0% y/y and are +0.6% above their 5-year average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended April 16 rose by +1 rig to a 1-year high of 94 rigs.
Natural gas prices are likely to face stiff resistance near $2.807 and $2.914, meanwhile, immediate support level is seen around 50 days EMA at $2.520 and 100 days EMA at $2.475.