Last Week in Natural Gas
Natural gas finally found a bid. June expired just above $3.00 on May 27, July grabbed the front, and the contract ripped to a 2.5-month high — up roughly 9.5% on the week and near 19% on the month — as a heat dome anchored over the south-central US and confirmed above-normal summer outlooks pulled peak-cooling length forward. The rally wasn’t clean. Thursday’s EIA release printed below consensus but still landed above the five-year-average pace, leaving storage around 6.2% over the seasonal norm; the prior week’s +101 Bcf had already topped its +95 consensus. That cushion, plus record-pace production, capped every rip. Underneath, the structural story barely moved: the FMA ONI ticked to +0.11 — the first positive reading in six and observational confirmation the El Niño the seasonal models flagged is emerging — yet the back of the curve refused to add winter premium. Flow paid up aggressively for July and August and left November flat. Peak summer got bid; winter did not.
The Week Ahead
The week opens with Atlantic hurricane season officially starting June 1 against a below-normal outlook — El Niño shear and cooler tropical Atlantic water keep the Gulf supply-disruption premium off the table, stripping a tail bid that normally firms the autumn contracts. Thursday’s EIA print for the week ending May 29 is the marquee catalyst; early consensus clusters in the high-80s Bcf, which would still run above the seasonal norm and keep the surplus intact even as builds shrink off their May peak. Watch the heat: forecasters favor above-normal temperatures across much of the Lower 48 through summer with no below-normal regions, and if the dome holds, power-burn verification near record levels does the bullish work the front needs. On supply, Corpus Christi maintenance is the near-term feedgas drag, but Plaquemines, Golden Pass Train 1 and Corpus Stage 3 are ramping export pull into the back half of the year. The tension is unchanged — real summer demand against a near-certain warm winter the curve still won’t discount.
In Plain English
Natural gas prices firmed up sharply last week, climbing to their highest level in about two and a half months as a powerful heat wave settled over the southern US and forecasters called for a hot summer across most of the country. Hotter weather means more air conditioning, and that means power plants burn more gas. Even so, there’s plenty of gas in storage — more than is normal for this time of year — which is keeping a lid on prices. The bigger picture: an El Niño weather pattern, which tends to bring milder US winters, is taking shape. A mild winter means less heating demand, so prices further out remain under pressure.