U.S. natural gas futures slid 2% to a 10-week low on near-record output and a decline in daily flows to liquefied natural gas export plants.
Gas futures for May delivery on the New York Mercantile Exchange slid 5.6 cents, or 1.7%, to $3.273 per million British thermal units at 9:10 a.m. EDT (1310 GMT), putting the contract on track for its lowest close since February 4.
That decline pushed the contract into oversold territory for a second time this month.
U.S. gas stockpiles were currently around 4% 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 rose to 106.3 billion cubic feet per day so far in April, up from a monthly record of 106.2 bcfd in March.
Looking ahead, however, analysts said energy firms could cut back on oil drilling in the coming weeks due to the roughly 14% drop in U.S. crude futures so far in April.
The crude price drop was related in part to uncertainty tied to U.S. President Donald Trump’s on-again off-again trade tariffs, which could reduce economic growth and oil demand.
Any reduction in oil drilling in shale basins such as the Permian in Texas and New Mexico and the Bakken in North Dakota could boost gas prices by cutting gas output.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 1.
With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 99.7 bcfd this week to 96.7 bcfd next week. Those forecasts were slightly higher than LSEG’s outlook on Tuesday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. climbed from a monthly record of 15.8 bcfd in March to 16.2 bcfd so far in April on rising flows to Venture Global’s 3.2-bcfd Plaquemines export plant under construction in Louisiana.
On a daily basis, however, LNG feedgas was on track to hold at a one-week low of 16.1 bcfd on Wednesday, down from an average of 16.7 bcfd over the prior seven days, according to LSEG data.
That daily LNG feedgas decline was mostly due to lower expected flows to Cheniere Energy’s 3.9-bcfd Corpus Christi export plant in service and under construction in Texas to 1.7 bcfd on Wednesday, down from 2.2 bcfd on Tuesday and an average of 2.3 bcfd over the prior seven days. The Corpus Christi plant includes three 0.8-bcfd operating trains and seven 0.2-bcfd midscale trains under construction.
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 high of around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and a 10-month low of around $11 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters