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LNG Demand and Production Trends Support Prices
A key driver of bullish sentiment is strong LNG demand. Feed gas deliveries to U.S. export terminals climbed to 15.7 Bcf/day, up 5% week-over-week. Meanwhile, Lower-48 dry gas production dipped to 105 Bcf/day, highlighting a potential supply squeeze.
Adding further support, last week’s EIA storage report showed a larger-than-expected draw of 62 Bcf, well above the five-year average draw of 56 Bcf for this time of year. As of March 7, inventories were down 27% year-over-year and nearly 12% below the seasonal five-year average, reinforcing concerns about tight supplies ahead of the summer cooling season.
Mixed Weather Outlook Keeps Market in Check
Near-term weather forecasts are mixed, limiting immediate upside momentum. The western U.S. will see colder conditions with rain and snow, while much of the country remains warmer than normal through midweek. A shift toward more moderate demand is expected as colder systems sweep across the country by Thursday, potentially boosting heating demand but not significantly altering the overall supply-demand balance.
Looking ahead, Maxar Technologies forecasts a warming trend in the West and Central U.S., with cooler temperatures in the Mid-Atlantic for late March. This mixed pattern could temper volatility unless a stronger cold front develops.
Bullish Factors in the Longer Term
In a longer-term bullish development, the lifting of the Biden administration’s pause on LNG export project approvals in January could provide structural support for prices. A backlog of projects, including a Commonwealth LNG facility in Louisiana, is now under active consideration. Expanding U.S. LNG export capacity would increase global demand for U.S. natural gas, tightening supplies further.
Additionally, U.S. electricity demand remains strong. The Edison Electric Institute reported that electricity output in the Lower-48 states rose 7.8% year-over-year in early March, a positive sign for natural gas consumption from power generators.
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