U.S. natural gas futures slid about 3% on Thursday on forecasts for mild weather and lower demand over the next two weeks than previously expected.
Analysts also noted gas prices were following other energy futures lower on worries U.S. President Donald Trump’s on-again off-again trade tariff uncertainty would reduce economic growth and demand for energy around the world.
Gas futures for May delivery on the New York Mercantile Exchange fell 11.5 cents, or 3.0%, to $3.701 per million British thermal units at 8:51 a.m. EDT (1251 GMT).
In addition, the price decline came ahead of a federal report expected to show utilities added more gas to inventories last week than usual for this time of year as mild weather kept gas demand low.
Analysts projected utilities added 50 billion cubic feet of gas into storage during the week ended April 4.
That compares with an increase of 16 bcf during the same week last year and a five-year average build of 17 bcf for this time of year.
Traders noted that 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 ever for that month.
Gas stockpiles remained 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 105.8 billion cubic feet per day so far in April, down from a monthly record of 106.2 bcfd in March.
On a daily basis, output was on track to drop by around 3.7 bcfd over the past five days to a preliminary six-week low of 103.4 bcfd on Thursday due primarily to normal spring pipeline maintenance in Texas and other parts of the country. Analysts said preliminary data is often revised later in the day.
Looking forward, analysts noted the roughly 15% drop in U.S. crude futures over the past six days to a four-year low earlier this week could prompt energy firms to start cutting 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 25.
With seasonally mild weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 108.1 bcfd this week to 100.3 bcfd next week. Those forecasts were lower than LSEG’s outlook on Wednesday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. rose to 16.1 bcfd so far in April, up from a monthly record high of 15.8 bcfd in March.
On a daily basis, LNG feedgas was on track to reach 17.2 bcfd on Wednesday, up from a daily record of 16.7 bcfd on Tuesday, with gas flows to Venture Global’s 3.2-bcfd Plaquemines export plant under construction in Louisiana hitting an all-time high of 2.4 bcfd.
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 $11 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and at a seven-month low of around $13 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters