US natgas prices climb 4% to 3-week high on lower output, higher demand

By Scott DiSavino

U.S. natural gas futures climbed about 4% to a three-week high on Friday on a drop in output over recent days and forecasts for more demand this week than previously expected.

Gas futures NG1! for June delivery on the New York Mercantile Exchange rose 15.1 cents, or 4.3%, to $3.63 per million British thermal units, their highest close since April 9.

For the week, the front-month was on track to jump about 24% after dropping 29% over the prior four weeks.

Analysts said mild weather expected to last through mid-May should keep heating and cooling demand low, allowing utilities to continue injecting more gas into storage than normal for this time of year.

Gas stockpiles were around 1% above the five-year normal. Gas stockpiles had been below normal from mid-January through late April after utilities pulled a monthly record 1.013 billion cubic feet of gas from storage in January to keep homes and businesses warm during extreme cold weather this winter.

Some analysts said mild weather and record output this spring could allow energy firms to add record amounts of gas into storage in May. The current all-time monthly injection high of 494 bcf was set in May 2015.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 103.0 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.

On a daily basis, gas output was on track to drop by 2.8 bcfd over the last five days to a preliminary two-month low of 102.6 bcfd on Friday. That, however, is a smaller daily decline than LSEG forecast on Thursday. Analysts have noted that preliminary data - especially for the first day of the month - is often revised later in the day.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 17.

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 98.8 bcfd this week to 96.0 bcfd next week and 95.5 bcfd in two weeks. The forecast for this week was higher than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big liquefied natural gas export plants operating in the U.S. fell to 15.5 bcfd so far in May, down from a monthly record of 16.0 bcfd in April on rising flows to Venture Global's VG 3.2-bcfd Plaquemines export plant under construction in Louisiana.

The LNG feedgas decline so far this month was mostly due to a drop in flows to Cameron LNG's 2.0-bcfd export plant in Louisiana to 1.5 bcfd for a second day in a row on Friday, down from an average of 2.2 bcfd over the prior seven days.

Officials at Cameron LNG were not immediately available for comment on the feedgas reduction. The company, however, has told customers that it will conduct maintenance next week on a pipeline that supplies gas to the plant, which will reduce flows on the pipe.

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 around $11 per mmBtu at both the Dutch Title Transfer Facility (TRNLTTFMc1) benchmark in Europe and the Japan Korea Marker (JKMc1) benchmark in Asia.