Natural gas prices are sustaining near $2.946 after a robust rally in the last few weeks from a low of $2.453 registered on Apr. 6. Natural gas is trading in a tight $2.880-$3.000 range from past several days, as near normal US temperature is expected during mid of this month.
Weather data agency Maxar on Wednesday said that normal and near-normal temperatures are expected across most of the US from May 15-19, which was earlier predicted to be cooler weather during this period.
US domestic demand on Wednesday fell -7.9% y/y to 58.5 bcf, which is negative for natural gas prices.
However, gas prices are finding support from robust export demand for the last several months. As per Bloomberg data, Gas flows to US LNG export terminals on Wednesday rose +55% y/y to 11.7 bcf.
Additionally, US electricity production is continuing to grow and is supportive of NG prices as it is used for electricity production. As per Edison Electric Institute, US electricity output in the week ended May 1 rose +7.4% y/y to 69,091 GWh (gigawatt hours). As per the Bloomberg report, US NG production was stable at 87.987 bcf/d on Tuesday.
Natural gas prices are likely to get fresh direction from the weekly inventory report which is scheduled to release later today. The market forecast is for a +64 bcf increase in inventory for last week. As per the last EIA report, US natural gas inventories are down -14.1% y/y and are -2.1% below their 5-year average.
Meanwhile, the number of active US natural Gas drilling rigs in the week ended Apr. 30 rose by +2 rigs to a 1-year high of 96 rigs, Baker Hughes reported rigs data on Friday.
Natural gas prices which are trading near $2.946 is likely to trade firm while above the key support level of 20 days EMA at $2.823 and 200 days EMA at $2.599 while it may face stiff resistance near $3.111 and $3.235