NYMEX May gas rises on bullish injection forecast, demand outlook

The NYMEX May gas futures jumped 11.8 cents Wednesday to settle at $1.939/MMBtu amid bullish injection outlook and rising demand.

The front-month contract moved between $1.774/MMBtu and $1.952/MMBtu.

"The recent turmoil in crude oil prices is looking bullish for gas prices," said Daniel Myers, analyst at Gelber & Associates, noting the considerable rally in prices for the latter half of 2020 as market participants expect a scaling back of associated gas production.

The December contract was trading at $2.947/MMBtu, up 2.1 cents day on day, while the January 2021 contract climbed 1.9 cents to $3.084/MMBtu.

"Prices are also getting support from the smaller-than-average injection expectation and supportive shoulder season," he said.

A storage build of 49 Bcf is expected for the week that ended April 17, according to a consensus of analysts surveyed by S&P Global Platts Analytics. This is 25 Bcf lower than the five-year average of 74 Bcf, according to US Energy Information Administration data.

Adding to the support, total US demand climbed 500 MMcf day on day to 87 Bcf Wednesday, according to Platts Analytics. So far in April, demand is averaging 87.7 Bcf/d, up 7.2 Bcf/d year on year.

The increase in demand is set to be largely driven by greater power burn, which is expected to climb 300 MMcf day on day to 25.8 Bcf. Over the next seven days, US power burn is projected to average about 28 Bcf/d, according to Platts Analytics.

On the supply side, US dry gas production is expected to total 91.9 Bcf Wednesday, about 200 MMcf lower day on day. Output is projected to hover around these levels in the coming week, averaging about 92 Bcf over the next seven days, Platts Analytics said.