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Tariff Pause Impacts Energy Markets
President Trump’s announced 90-day pause on reciprocal tariffs for 56 countries (excluding China) boosted market sentiment Wednesday, triggering a broad market recovery and prompting short covering in natural gas futures. While the broader pause was approved, the 10% levy implemented on April 5 remains in place for all U.S. trading partners, and tariffs on Chinese goods are set to increase to 125%.
Weather Patterns Supporting Demand
Weather forecasts have shifted cooler from the Midwest to the eastern US for April 14-18, potentially boosting heating demand. NatGasWeather reports a late-season chilly system sweeping across the Great Lakes and East over the next 7 days with highs of 40s-50s and lows of 20s-30s, interrupted by a brief warmer break Monday. The western, central, and southern regions will remain mild to warm.
Supply and Demand Fundamentals
Lower-48 state dry gas production reached 103.9 bcf/day (+3.1% y/y) on Wednesday, while demand registered 77.2 bcf/day (+11.5% y/y). LNG net flows to export terminals were 16.6 bcf/day (+15.5% w/w). Electricity output has increased 4.05% y/y for the week ended April 5, reaching 74,475 GWh, supporting natural gas demand from utilities.
Storage Outlook and Market Forecast
Consensus expectations for Thursday’s EIA report project a build of +62 bcf for the week ended April 4, substantially above the five-year average of +17 bcf. Current inventories (as of March 28) remain 21.5% below last year and 4.3% below the 5-year average.
BloombergNEF projects U.S. gas storage will remain 10% below the 5-year average this summer, suggesting continued market tightness. President Trump’s January decision to lift restrictions on gas export projects could provide longer-term price support by increasing LNG export capacity and boosting overall demand.
More Information in our Economic Calendar.
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