U.S. natural gas futures fell about 4% to a five-month low on Thursday on a bigger-than-expected weekly storage build and expectations that mild weather will keep heating and cooling demand low in coming weeks.
The U.S. Energy Information Administration (EIA) said energy firms added 88 billion cubic feet of gas to storage during the week ended April 18.
That was much bigger than the 64-bcf build that analysts forecast in a Reuters poll and compares with an increase of 86 bcf during the same week last year and a five-year average build of 58 bcf for this time of year.
Analysts said last week’s storage build was bigger than usual due to a high level of renewable power generation and mild weather, which should continue and allow utilities to boost the volume of gas in storage to above-normal levels in coming weeks.
U.S. gas stockpiles were around 2% 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.
Gas futures for May delivery on the New York Mercantile Exchange fell 11.7 cents, or 3.9%, to $2.905 per million British thermal units at 10:39 a.m. EDT (1439 GMT), putting the contract on track for its lowest close since November 15.
That price drop kept the front-month in technically oversold territory for a sixth day in a row for the first time since February 2024.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.5 billion cubic feet per day in April from a monthly record of 106.2 bcfd in March.
On a daily basis, output was on track to fall by around 2.8 bcfd over the past six days to a preliminary two-week low of 105.1 bcfd on Thursday, down from a record 108.0 bcfd on April 18. Traders noted preliminary data is often revised later in the day.
Part of the reason for the output reduction was maintenance on U.S. energy firm Kinder Morgan’s 2.7-bcfd Permian Highway gas pipe from the Permian basin in West Texas to the Texas Gulf Coast.
Kinder Morgan has said it will be performing a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 9.
LSEG forecast average gas demand in the Lower 48, including exports, will hold around 98.6 bcfd this week and next. Those forecasts were similar to LSEG’s outlook on Wednesday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. has climbed from a monthly record of 15.8 bcfd in March to 16.0 bcfd so far in April on rising flows to Venture Global’s 3.2-bcfd Plaquemines export plant, under construction in Louisiana.
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 at a one-week low of around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and at an 11-month low of around $12 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters