Is Storage Still a Drag or Already Priced In?

Traders are currently processing last week’s bearish EIA storage report, which revealed a substantial injection of 107 Bcf—nearly double the five-year average. While this figure may seem daunting at first glance, it fell slightly below the top-end forecasts, especially following a period characterized by mild weather across the U.S. This could indicate that much of the bearish sentiment is already baked into the market’s pricing.

However, it’s crucial to highlight the stark regional inventory deficits. The East and Midwest hubs are facing year-over-year inventory shortfalls of 21.7% and 24.4%, respectively. These deficits provide a cushion for gas prices, even amidst a seasonally softer backdrop. Investors should keep a close eye on these regional disparities, as they may hold the key to understanding pricing dynamics moving forward.

Will Weather Continue to Cap Upside Potential?

As we move into early May, the weather is expected to remain mild, with the majority of regions seeing temperatures ranging from 60°F to 80°F. Only the Southern U.S. is likely to experience elevated cooling demand, with some areas forecasted to hit the 90s. Minor heating demand could arise in parts of the Midwest, but the overall absence of extreme weather events is likely to dampen residential and commercial gas usage. This, in turn, may prevent any notable upward price momentum in the short term.

At Extreme Investor Network, we emphasize the importance of analyzing weather patterns, as they can significantly influence market sentiment and trading strategies.

Export Demand and Supply Risks Offering a Floor?

Despite the softening weather narrative, underlying demand fundamentals remain robust. Notably, LNG feedgas demand has increased by 1.5% week-over-week, reaching 15.8 Bcf/d, establishing a stable export avenue backed by international buyers. Moreover, U.S. electricity generation is up 2.1% year-over-year, which adds further strength to the power sector’s demand.

On the supply front, while dry gas production is holding steady at 105.6 Bcf/d, rig counts have registered only slight increases. This cautious stance among producers reflects a calculated approach to future market conditions. Additionally, mounting geopolitical concerns, like potential U.S. tariffs on Canadian gas imports, introduce further supply-side uncertainties—especially for Northeast markets.

Stay ahead of market fluctuations by regularly checking our dedicated resources and analysis on export demand and geopolitical factors.

Short-Term Outlook: Bullish Setup Tempered by Weather Resistance

In summary, while the short-term outlook does present some bullish possibilities—especially when coupled with strong demand fundamentals—it’s important to recognize that persistent mild weather may act as a limiting factor on price increases. Traders should remain vigilant, regularly evaluating the impact of both short-term weather anomalies and longer-term geopolitical developments.

At Extreme Investor Network, we’re committed to providing you with the insights and analytics necessary to navigate this complex landscape. Explore our resources and join a community of informed investors ready to capitalize on opportunities in the ever-evolving energy market. Stay informed, stay connected, and let’s thrive together!