U.S. natural gas futures held near a two-week high on Friday as forecasts for more demand this week offset a lower than previously expected output decline in recent days.
Gas futures for July delivery on the New York Mercantile Exchange rose 0.9 cents, or 0.3%, to $3.531 per million British thermal units at 9:13 a.m. EDT (1313 GMT).
For the week, the front-month was up about 6% after holding steady in the prior week.
For the month, the contract was up about 4% after falling 19% in April.
Looking ahead, the premium of futures for October 2025 over November 2025 (NGV25-X25) rose to its highest since October 2023 due to bigger increases in the November contract than the October contract. That means the market is likely betting on higher demand and/or lower than average amounts of gas in storage going into next winter.
Gas stockpiles were around 4% above the five-year (2020-2024) average, and expected to keep growing with energy firms expected to inject more gas into storage during the week ended May 30 for a seventh week in a row.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 105.1 billion cubic feet per day so far in May, down from a monthly record high of 105.8 bcfd in April.
Energy traders said output reductions this month were primarily due to normal spring maintenance on gas pipelines, including U.S. energy firm Kinder Morgan’s 2.7-bcfd Permian Highway from the Permian Basin in West Texas to the Texas Gulf Coast.
Energy firms usually work on gas pipes when demand is low in the spring and autumn.
Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 14.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 95.8 bcfd this week to 96.3 bcfd next week and 100.3 bcfd in two weeks. The forecast for this week was higher than LSEG’s outlook on Thursday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 15.1 bcfd so far in May, down from a monthly record high of 16.0 bcfd in April.
On a daily basis, LNG feedgas was on track to fall from 14.7 bcfd on Thursday to a preliminary three-week low of 13.9 bcfd on Friday due primarily to reductions at Cheniere Energy’s plants.
Gas flows to Cheniere’s 4.5-bcfd Sabine Pass in Louisiana were on track to drop from 3.9 bcfd on Thursday to an 11-month low of 3.7 bcfd on Friday, while feedgas to the company’s 3.9-bcfd Corpus Christi in Texas was on track to drop from 2.1 bcfd on Thursday to a two-week low of 1.6 bcfd on Friday.
Energy traders have said they expect total LNG feedgas to remain below April’s record high in June with Cheniere planning about three weeks of maintenance on liquefaction trains at Sabine around May 31-June 22.
Source: Reuters