U.S. natural gas futures fell about 5%to a two-week low on Thursday on a smaller-than-expected storage withdrawal andforecasts for demand to drop and output to rise with the weather turning warmer than normal in late January.
The U.S. Energy Information Administration (EIA) saidutilities pulled 154billion cubic feet (bcf) of gas out of storage during the week ended Jan. 12.
That was smaller than the 164-bcf decline analysts forecast in a Reuters poll and compareswith a withdrawal of 68 bcf in the same week last year and a five-year (2019-2023) average decline of 126 bcf.
Alsoweighing on prices, the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants fell this weekto a one-year low as energy firms likely sold some of their gas into the domestic market after extreme cold this week boosted U.S. power gas prices to multi-year highs in several regions.
The extreme cold also cut gas supplies by freezing wells and increased daily gas demand to a record high on Tuesday.
Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange fell 13.5 cents, or 4.7%, to $2.735 per million British thermal units (mmBtu) at 10:39 a.m. EST (1539 GMT),putting the contract on track for its lowest close since Jan. 3.
SUPPLY AND DEMAND
Financial company LSEG said average gas output in the Lower 48 states fell to 103.2 billion cubic feet per day (bcfd) so far in January from a monthly record of 108.0 bcfd in December.
On a daily basis, U.S. gas output was on track to jump 7.7 bcfd over the past two days to 98.1 bcfd on Thursday after plunging by 17.3 bcfd from Jan. 8-16 due primarily to freeze-offs and other cold weather events to a 12-month low of 90.4 bcfd on Tuesday. That drop was smaller than losses of 19.6 bcfd during Winter Storm Elliott in December 2022 and 20.4 bcfd during the February freeze in 2021.
Meteorologists projected temperatures in the Lower 48 states would switch from colder than normal from Jan. 18-21 to mostly warmer than normal from Jan. 22-Feb. 2.
With less cold weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would drop from 154.1 bcfd this week to 139.9 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.
On a daily basis, LSEG said total gas demand, including exports, soared to a record 168.2 bcfd on Tuesday. That was higher than LSEG forecast on Wednesday and topped the prior all-time high of 162.5 bcfd set on Dec. 23, 2022, during Winter Storm Elliott, according to federal energy data from S&P Global Commodities Insights.
Gas flows to the seven big U.S. LNG export plants fell to an average of 13.9 bcfd so far in January from a monthly record of 14.7 bcfd in December.
On a daily basis, LNG feedgas was on track to jump about 4.2 bcfd over the past two days to 13.5 bcfd on Thursday after dropping by 5.8 bcfd from Jan. 13-16 to a one-year low of 9.2 bcfd on Tuesday due mostly to reductions at U.S. energy company Cheniere Energy’s LNG.A Sabine Pass in Louisiana and Corpus Christi in Texas, Freeport LNG’s plant in Texas and Cameron LNG’s plant in Louisiana.
Source: Reuters (Reporting by Scott DiSavino, Editing by Nick Zieminski)