Natural Gas Posts Biggest Monthly Gain Since 2009

Natural gas has posted its largest monthly gain since June 2009 as mild weather and rising refinery margins sent prices to their highest in over a year.

Prices for the contract ended the month up nearly 10 percent. May saw a 10 percent gain to finish at $3.92 per million British thermal units, the highest since June 5, 2018, according to data from Genscape.

The Energy Information Administration (EIA) reported on Wednesday that shale gas output hit an all-time high last week, up 0.7 percent from the week before to 8.8 billion cubic feet per day. Natural gas inventories also reached a record last week.

Pipeline Markets Remain Quiet

The latest pipeline data from the Energy Information Administration (EIA) shows a lower active interstate natural gas pipeline and storage capacity since mid-May. Pipeline demand slowed, while pipeline takeaway capacity changed little.

In its latest natural gas weekly report, the EIA said that total natural gas demand rose to a record 80.1 billion cubic feet per day. That was a slight increase from the previous week’s record demand of 80.0 billion cubic feet per day. Overall, natural gas output rose modestly to 73.4 billion cubic feet per day. Natural gas imported from Canada rose 9.6 percent to 8.4 billion cubic feet per day, the highest for a comparable week since April 23, 2018. Meanwhile, exports remained at very healthy levels at 6.2 billion cubic feet per day.

Natural gas pipeline volumes remained largely unchanged since mid-May, with pipeline deliveries ranging from 76.7 billion cubic feet per day to 77.9 billion cubic feet per day.

Continued Steam Demand

Utility generators’ consumption for the week ended May 31 remained extremely strong, ranging from 87.3 billion cubic feet per day to 88.2 billion cubic feet per day. That would be an increase of 0.7 to 1.2 billion cubic feet per day from the week before. Power burn was particularly strong compared to last year. Compared to the same week last year, the EIA reported a year-over-year increase of 32.8 billion cubic feet per day. Electric utilities also ramped up their natural gas purchases during the week, using 18.4 billion cubic feet per day for use at power plants, up from 16.6 billion cubic feet per day in the previous week.

Year-over-year growth remains strong in both LNG and spot-market demand for natural gas, despite unusually warm weather in much of the United States. Year-over-year growth is the strongest it has been since the start of the year, according to data from EIA. There is also the possibility that LNG demand could grow in 2019, as some demand contracts with overseas buyers expire.

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