As much of the U.S. is experiencing warmer-than-normal temperatures, the forecasted demand has helped push the Henry Hub spot price over the $3 threshold for the first time since January.

Domestic Demand

Despite forecasts indicating warmer-than-usual weather, the total demand for natural gas in the U.S. has remained relatively stable. There's been a slight uptick of just 0.3 percent (equivalent to 0.2 billion cubic feet Bcf/d) compared to the week of May 27th. This consistency can be attributed to the current more settled weather conditions across the nation. Within the sectors, natural gas usage for power generation experienced a slight uptick of 0.7 percent (0.2 Bcf/d). Meanwhile, industrial consumption showed a more noticeable rise of 1.3 percent (0.3 Bcf/d), but residential and commercial consumption saw a decline of 3.5 percent.

International Demand  

On Monday, June 3rd, a crack in a Norwegian pipeline onboard the offshore Sleipner Riser caused Britain's prices to spike and concerns over supply shortages. In 2022, after the invasion of Ukraine, Norway overtook Russia as a big natural gas supplier, supplying almost 30 percent of the country's natural gas supply by pipeline.

Being a frontrunner in liquefied natural gas (LNG) exports and serving as Europe's main natural gas supplier, fulfilling 54 percent of its demand, the U.S. plays a crucial role in the worldwide energy landscape. The country's LNG exports continue to rise, increasing from 12.4 billion cubic feet per day (Bcf/d) to 13.2 Bcf/d from the previous year to the current one. Any disruptions in the market create openings for the U.S. to extend its export reach even more.

Production & Supply  

As of Friday, May 31, 2024, the working gas in storage totaled 2,893 billion cubic feet (Bcf), representing a 14.8 percent increase compared to the same period last year. While natural gas storage is still currently above the 5-year average of 25 percent, storage has been on a downward trend recently, with an over 10 percent drop from April 26, 2024, to May 31, 2024.

The U.S. has seen a rapid decline in natural gas rigs in recent years, with a substantial 20 percent drop in 2023. However, this trend has begun to plateau, showing signs of a slower decrease in rig counts. Recently, there was a small 1 percent uptick from the week of May 21st to May 28th. Still, compared to the previous year, there's been a significant 27 percent decrease, resulting in 100 active natural gas rigs.

As producers continue to cut production to bring prices back in line, a volatile hurricane season can significantly impact U.S. natural gas production, given that hurricanes often impact the Gulf of Mexico's shores, where nearly half of the nation's facilities reside. The National Oceanic and Atmospheric Administration (NOAA) has forecasted up to seven major hurricanes this year. This prediction exceeds those made prior to the record-breaking 2005 season, which saw the devastating hurricanes Katrina and Rita.