FX.co ★ Natural Gas Extends Rebound

U.S. natural gas futures surged beyond $3.50 per MMBtu on Friday, marking a fourth consecutive session of gains. This upward trend is attributed to increased flows to liquefied natural gas (LNG) terminals within the U.S., enhancing the prospects for near-term export growth. This expectation is bolstered by rising natural gas benchmarks in both Europe and Asia, where colder weather has amplified demand, consequently driving U.S. consumers to contend with heightened overseas competition. Additionally, colder temperatures in the U.S. Northeast have provided further support for prices. Despite this, the front-month contracts are poised to conclude the week with nearly a 20% decline, following Monday's significant drop that prolonged the extraordinary volatility experienced in U.S. natural gas markets. This volatility is primarily a result of elevated heating demand caused by a series of winter storms sweeping across the country. As a result, the Energy Information Administration (EIA) reported a record decline of 360 billion cubic feet in stockpiles last week, leaving inventories 27 billion cubic feet below the five-year average, in stark contrast to a 143 billion cubic feet surplus in the prior period.