U.S. natural gas futures climbed nearly 5% to their highest in two weeks on Monday on concerns over a decline in future production after data last week showed energy companies had cut down on the number of rigs for drilling gas.
Front-month gas futures for June delivery on the New York Mercantile Exchange rose 10.9 cents, or 4.8%, to settle at $2.375 per million British thermal units (mmBtu), their highest since May 1.
Energy services firm Baker Hughes Co on Friday said the gas rig count, an early indicator of future output, fell by 16 to 141 in the week to May 12, the lowest since April 2022. Weekly gas rig decline was the most since February 2016.
“It’s just momentum coming out of Friday’s gas drilling report, which shows low levels of gas drilling rigs in key basins like the Eagle Ford, Marcellus and for Haynesville in over a year,” Gary Cunningham, director of market research at Tradition Energy, said.
A lack of long-term drilling plans has driven prices, Cunningham said, adding he anticipated “a pullback in production” later in the year.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states was 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record high in April.
Gas prices have remained near two-year lows as warmer weather curtailed demand while supply remained plentiful.
Meteorologists projected the weather in the U.S. Lower 48 states would switch from warmer-than-normal levels from May 12-17 to near-normal from May 18-27.
Refinitiv forecasts that U.S. gas demand, including exports, would fall from 91.7 billion cubic feet per day (bcfd) this week to 89.0 bcfd next week.