US Natgas Jumps 4% To Fresh 13-Year High on Small Storage Build

(Reuters) — U.S. natural gas futures gained about 4% to close at a fresh 13-year high on Thursday on a smaller than usual storage build and a recent drop in U.S. output.

Also supporting futures prices in recent days, spot gas prices soared this week due to unusual cold in Alberta, Canada and unusual heat in the U.S. Mid Atlantic region.

The U.S. Energy Information Administration (EIA) said utilities added 15 billion cubic feet (Bcf) of gas to storage during the week ended April 8, which matched the 15- Bcf build analysts forecast in a Reuters poll and was much smaller than the increase of 55 Bcf in the same week last year and a five-year (2017-2021) average increase of 33 Bcf.

Last week's increase boosted stockpiles to 1.397 trillion cubic feet (Tcf), or 17.8% below the five-year average of 1.700 Tcf for this time of the year.

U.S. front-month gas futures rose 30.3 cents to settle at $7.300 per million British thermal units (mmBtu), their highest close since October 2008.

For the week, the contract gained about 16%, its biggest weekly percentage increase since August 2020.

Record global demand for U.S. liquefied natural gas (LNG) has kept the front-month in technically overbought territory with a relative strength index (RSI) over 70 for a 12th day in a row for the first time since September 2019 and boosted the 12-month strip to its highest since November 2008 for a second straight day.

U.S. gas futures have soared about 96% already this year with much higher prices in Europe keeping demand for U.S. LNG near record highs since Russia invaded Ukraine on Feb. 24.

U.S. gas prices have soared about 57% over the past month, yet European gas, currently around $28 per mmBtu, fell about 22% during that time as Russia keeps sending supplies via pipeline and LNG vessels keep delivering cargoes.

Despite recent gains, the U.S. gas market remains mostly shielded from much higher global prices because the United States is the world's top gas producer, with all the fuel it needs for domestic use and capacity constraints that inhibit exports of more LNG no matter how high global prices rise.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 94.6 billion cubic feet per day (Bcf/d) so far in April from 93.7 Bcf/d in March, down from December's monthly record of 96.3 Bcf/d.

On a daily basis, output dropped about 1.9 Bcf/d over the past few days to a preliminary 93.4 Bcf/d on Thursday. Preliminary data is often revised.

The amount of gas flowing to U.S. LNG export plants slid from a record 12.9 Bcf/d in March to 12.4 Bcf/d so far in April due mostly to declines at Freeport LNG's facility in Texas. The United States can turn about 13.2 Bcf/d of gas into LNG.

Since the United States will not be able to produce more LNG anytime soon, the country has worked with allies to divert more LNG exports to Europe to help EU countries and others break their dependence on Russian gas.

Russia, the world's second biggest gas producer, provided about 30%-40% of Europe's gas in 2021, totaling about 18.3 Bcf/d.

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