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U.S. natural gas futures rose Monday after weather forecasts for the back half of March turned cooler as well as lower U.S. production, but continued concerns about growing storage surpluses hold down attempts at a rally.
“The 37% premium that natural gas storage is holding to the five-year average should keep a $2.00 cap on front-month prices,” BOK Financial’s Dennis Kissler says, adding that on a technical basis, “the bearish trend continues with support to April futures at the $1.60 area.”
Energy traders said another factor supporting prices was the continued decline in U.S. production after domestic gas prices collapsed in February to their lowest since June 2020.
Front-month Nymex natural gas (NG1:COM) for April delivery closed +2.9% to $1.703/MMBtu.
ETFs: (NYSEARCA:UNG), (BOIL), (KOLD), (FCG), (UNL)
Meanwhile, European natural gas prices jumped as much as 8.1% Monday before settling +6.7%, extending gains for a fourth day after plunging as much as 30% since the start of the year, as traders focus on factors that will affect refilling storage ahead of next winter.
A power outage has affected gas fields delivering into the FLAGS pipeline, which transports gas from the North Sea and Norwegian continental shelf to the St. Fergus terminal, a maintenance outage at Shell’s (SHEL) St. Fergus gas plant is scheduled to start today, reducing supply by 10M-15M cm/day, and an outage at Norway’s Aasta Hansteen field also started today with a loss of 7.5M cm/day of supply.
Natgas prices also are tracking advances in crude oil after Ukraine attacks on Russian refineries, which are raising “the geopolitical temperature,” Saxo Bank’s Ole Hansen says.