U.S. natural gas futures eased about 1% on Friday on forecasts for less demand this week and next than previously expected and signs the amount of gas flowing to liquefied natural gas (LNG) export plants was down a bit.
Other factors weighing on prices this week have included expectations supplies will soon rise once the Mountain Valley gas pipeline enters service and news that price increases in May prompted EQT, the nation’s biggest gas producer, to start boosting output.
Front-month gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 3.5 cents, or 1.2%, to $2.924 per million British thermal units (mmBtu) at 9:08 a.m. EDT (1308 GMT).
Despite the small price decline on Friday, the front-month was still up about 1% this week after rising about 13% last week and 3% two weeks ago.
The futures price decline occurred despite forecasts for hotter weather through the end of June that should boost the amount of gas power generators burn to keep air conditioners humming.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 97.9 billion cubic feet per day (bcfd) so far in June, down from 98.1 bcfd in May. That compares with a monthly record of 105.5 bcfd in December 2023.
On a daily basis, output was on track to ease by around 0.9 bcfd to a preliminary 97.5 bcfd on Friday. That, however, was up from a one-month low of 96.6 bcfd on Tuesday and a 15-week low of 96.5 bcfd on May 1.
Before recent output declines in June, analysts said increases in May were a sign producers were slowly boosting output after a 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24. EQT EQT.N said this week that it started boosting output.
Overall, U.S. gas production was still down by around 8% so far in 2024 after several energy firms, including EQT EQT.N and Chesapeake Energy CHK.O, delayed well completions and cut drilling activities when prices fell in February and March.
Chesapeake is on track to become the biggest U.S. gas producer when it completes its planned merger with Southwestern Energy SWN.N.
Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least June 29.
LSEG forecast that heat would boost gas demand in the Lower 48, including exports, from 94.7 bcfd this week to 97.3 bcfd next week and 102.2 bcfd in two weeks. The forecasts for this week and next, however, were lower than LSEG’s outlook on Thursday.
Gas flows to the seven big U.S. LNG export plants, meanwhile, rose to 13.1 bcfd so far in June, up from 12.9 bcfd in May.
That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing plant and pipeline maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy’s LNG.N Sabine Pass, Venture Global’s Calcasieu Pass.
Flows to the 4.5-bcfd Sabine, the nation’s largest LNG export plant, were on track to slide from 4.1 bcfd on Thursday to 3.7 bcfd on Friday, their lowest since August 2023, according to LSEG data. That compares with an average of 4.2 bcfd over the prior seven days.
Source: Reuters (Reporting by Scott DiSavino)