U.S. natural gas futures eased about 1% on Thursday on near record output, mild weather and forecast for less heating demand over the next two weeks than previously expected.
On its first day as the front-month contract, gas futures for April delivery on the New York Mercantile Exchange fell 3.1 cents, or 0.8%, to $3.928 per million British thermal units (mmBtu) at 7:44 a.m. EST (1244 GMT).
That price decline came despite record gas flows to liquefied natural gas (LNG) export plants and ahead of a federal report expected to show utilities pulled massive amounts of gas out of storage to heat homes and businesses during frigid weather last week.
Analysts projected utilities pulled 266 billion cubic feet (bcf) of gas out of storage during the week ended February 21. That compares with a drop of 86 bcf during the same week last year and a five-year average draw of 141 bcf for this time of year.
Financial company LSEG said average gas output in the Lower 48 U.S. states rose to 104.6 billion cubic feet per day (bcfd) so far in February from 102.7 bcfd in January, when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.
Over the last few weeks, output dropped from a record daily high of 106.7 bcfd on February 6 to a three-week low of 100.5 bcfd on February 19 as extreme cold froze wells before rising to a two-week high of 105.2 bcfd on February 27 as milder weather unfroze those wells.
Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through March 14.
With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 125.8 bcfd this week to 117.4 bcfd next week. Those forecasts were lower than LSEG’s outlook on Wednesday.
The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.6 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.
That LNG feedgas increase mostly came as gas flows to Venture Global’s 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana hit a record high of 1.8 bcfd on Wednesday and Thursday.
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 partly to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading around $14 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and at a 10-week low near $13 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters