Natural gas prices should move higher this summer

[dan_s]

From HFI Research:

Why we went long on natural gas today

May Henry Hub contracts dipped below $3/MMBtu today causing some in the trading community to scratch their heads. Given the weakness of oil prices and the expected increase in LNG demand, why are natural gas prices so weak?

The JAN26 NYMEX contract for HH Ngas closed at $4.676/MMBtu today. JAN26 will be the front month contract in December, 2025.

As we've noted in previous NGFs, the elevated speculator positioning that accumulated over the winter needed to be liquidated.

See 1 Year chart here: https://en.macromicro.me/charts/30979/natural-gas-future-options-fund-net-position-vs-price?utm_source=substack&utm_medium=email

And as you can see in the chart above, we've finally seen net positioning return to normal.

Second, we are in the heart of the shoulder season, and there are no real catalysts to push prices higher in the near term. Lower 48 gas production remains resilient around ~106 Bcf/d, so the market is not convinced that production will decrease from the oil price downturn.
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MY TAKE: Why U.S. natural gas prices need to move higher
1. Natural gas in storage is still below the 5-year average and demand for U.S. natural gas is MUCH HIGHER than it was five years ago.
2. By Mid-May demand from natural gas fired power plants will ramp up and will be running at full capacity June - Sept.
3. LNG exports will set new records week after week.
4. Lower oil prices mean fewer new oil wells, which means less associated gas.
5. Many more natural gas fired power plants will be needed to meet AI data centers electricity demand.