U.S. natural gas futures climbed about 2% on Tuesday on a drop in daily output and near record gas flows to liquefied natural gas (LNG) export plants.
That increase came despite forecasts for lower demand for gas over the next two weeks and worries U.S. President Donald Trump’s tariffs could reduce global economic growth and demand for energy.
Gas futures for May delivery on the New York Mercantile Exchange rose 8.1 cents, or 2.2%, to $3.736 per million British thermal units at 8:49 a.m. EDT (1249 GMT). On Monday, the contract closed at its lowest since February 13.
Energy traders said mild weather and low demand last month likely allowed utilities to add gas to storage in March for the first time since 2012 and only the second time in history.
Gas stockpiles, however, were still about 3% below normal levels for this time of year after cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 105.9 billion cubic feet per day so far in April, down from a monthly record 106.2 bcfd in March.
On a daily basis, output was on track to drop by 4.0 bcfd over the past three days to a preliminary six-week low of 103.2 bcfd on Tuesday. Analysts have said preliminary data is often revised later in the day.
Looking forward, analysts noted the drop in U.S. crude futures to a near four-year low on Monday due in part to worries Trump’s trade tariffs could prompt energy firms to cut back on oil drilling.
Any reduction in oil drilling in shale basins like the Permian in Texas and New Mexico and the Bakken in North Dakota could cut gas output associated with that oil production.
Meteorologists projected temperatures in the Lower 48 states would remain mostly near normal through April 23.
With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 109.1 bcfd this week to 98.1 bcfd next week. Those forecasts were lower than LSEG’s outlook on Monday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. held at 15.8 bcfd so far in April, matching the monthly record high in March.
That record LNG feedgas came as the amount of gas flowing to Venture Global’s 3.2-bcfd Plaquemines export plant under construction in Louisiana was on track to hit a record 2.2 bcfd on Tuesday.
The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading near a six-month low of around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and at a three-month low of around $13 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters