US Natural Gas Fund Shares Rise Over 7%: What's Going On?

Zinger Key Points

U.S. natural gas prices surged 7% due to record flows to LNG export plants and higher-than-expected demand forecasts for the next two weeks.
Germany’s rejection of talks to restart Russian gas via Nord Stream 2 increases reliance on U.S. LNG, supporting higher natural gas prices.
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United States Natural Gas Fund LP UNG shares are trading higher Monday driven by record flows to liquefied natural gas (LNG) export plants and stronger-than-expected demand forecasts over the next two weeks.

What To Know: According to Reuters, traders attributed the price movement to reports confirming that Germany is not pursuing negotiations with Russia to revive the Nord Stream 2 pipeline.

Front-month gas futures for April delivery on the New York Mercantile Exchange increased by 27.6 cents or 7.2%, to $4.110 per million British thermal units (mmBtu). This rebound comes after the contract closed at its lowest point since Feb. 14.

Despite record U.S. gas output and mild weather forecasts through mid-March, concerns about supply levels and ongoing European demand supported prices.

U.S. gas production in the Lower 48 states rose to 105.8 billion cubic feet per day (bcfd) in early March, up from February’s record 104.7 bcfd, according to financial data firm LSEG. Feedgas deliveries to the eight major U.S. LNG export terminals also increased, averaging 15.8 bcfd so far in March compared to 15.6 bcfd in February. This increase is partly due to new capacity at Venture Global's Plaquemines LNG export plant in Louisiana.

U.S. natural gas inventories remain about 12% below the five-year average after heavy withdrawals during January's extreme cold weather. With mild weather ahead, demand is expected to decline from 119.3 bcfd this week to 114.7 bcfd next week, although these projections remain higher than previous forecasts.

Globally, gas prices remain elevated, with natural gas trading around $14 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and the Japan Korea Marker (JKM) in Asia.

The U.S. became the world's largest LNG exporter in 2023, surpassing Australia and Qatar, potentially driven by increased global demand amid supply disruptions and sanctions following Russia's invasion of Ukraine.

UNG Price Action: United States Natural Gas shares closed at $21.95, up 7.92%, according to Benzinga Pro.