U.S. natural gas futures edged up about 1% to a four-week high on Thursday on a drop in output in recent weeks and forecasts for more demand over the next two weeks than previously expected due in part to a rise in gas flows to liquefied natural gas (LNG) export plants.
Gas futures for June delivery on the New York Mercantile Exchange rose 2.0 cents, or 0.6%, to $3.641 per million British thermal units by 9:10 a.m. EDT (1310 GMT), putting the contract on track for its highest close since April 9.
That price increase came ahead of a federal report expected to show last week’s storage build was much bigger than usual because mild weather kept both heating and cooling demand for gas lower than usual for this time of year.
Analysts projected utilities added 101 billion cubic feet (bcf) of gas into storage during the week ended May 2.
That compares with an increase of 81 bcf during the same week last year and a five-year average build of 79 bcf for this time of year.
Gas stockpiles are currently around 1% above the five-year normal.
Inventories had been below normal from mid-January through late April after utilities pulled a monthly record of 1.013 billion cubic feet of gas from storage in January to keep homes and businesses warm during extreme cold weather this winter.
Some analysts said mild weather and record output this spring could allow energy firms to add record amounts of gas into storage in May. The current all-time monthly injection high of 494 bcf was set in May 2015.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 103.4 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.
Since gas output hit a daily record high of 107.4 bcfd on April 18, production was on track to drop about 4.8 bcfd to a near 10-week preliminary low of 102.6 bcfd on Thursday. Analysts have noted that preliminary data is often revised later in the day.
Looking ahead, analysts said the roughly 18% drop in U.S. crude futures so far in 2025 would likely prompt drillers to cut back on oil production. Any decline in oil production would ultimately reduce the amount of gas pulled out of the ground that is associated with that oil production. About 37% of U.S. gas production comes from associated gas.
Over time, analysts said that reduction in gas output should increase gas prices.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 23.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 97.1 bcfd this week to 94.8 bcfd next week. Those forecasts were higher than LSEG’s outlook on Wednesday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 14.8 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.
The LNG feedgas decline so far this month was mostly due to reductions for maintenance at Cameron LNG’s 2.0-bcfd plant in Louisiana and Cheniere Energy’s 3.9-bcfd Corpus Christi plant under construction and in operation in Texas, and a one-day outage at Freeport LNG’s 2.1-bcfd plant in Texas on Tuesday.
Gas flows to Cameron were on track to rise to 1.5 bcfd on Thursday, up from around 1.2 bcfd over the past three days, while flows to Corpus were on track to rise to 2.1 bcfd on Thursday, up from an average of 1.6 bcfd over the past two days.
Source: Reuters