US natgas prices edge up to 2-week high on decline in daily output

U.S. natural gas futures edged up about 1% to a two-week high on Monday as a bullish drop in daily output offset bearish forecasts for lower demand next week than previously expected.

On its first day as the front-month, gas futures NG1! for June delivery on the New York Mercantile Exchange rose 4.3 cents, or 1.3%, from where the June future closed on Monday to settle at $3.386 per million British thermal units, their highest close since April 11.

That put the front-month up about 7% from where the lower-priced May contract closed on Monday when it was still the front-month.

Analysts project the amount of gas in storage will rise above the five-year normal for this time of year over the next week or two. Gas stockpiles have remained below normal levels since mid-January.

Inventories are about 1% below normal after utilities pulled a record 1.013 bcf of gas from storage in January to keep homes and businesses warm during extreme cold. Some analysts said mild weather and record output could allow energy firms to add record amounts of gas into storage in May, breaking the all-time monthly injection high of 494 bcf in May 2015.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.4 billion cubic feet per day in April from a monthly record of 106.2 bcfd in March.

On a daily basis, gas output fell about 1.0 bcfd over the past two days to a preliminary two-month low of 104.9 bcfd on Tuesday. Analysts have noted that preliminary data is often revised later in the day.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer through May 14.

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 99.0 bcfd this week to 96.6 bcfd next week. The forecast for next week was lower than LSEG's outlook on Monday.

The average amount of gas flowing to the eight big liquefied natural gas (LNG) export plants operating in the U.S. 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 VG 3.2-bcfd Plaquemines export plant under construction in Louisiana.

In LNG news, Australia's Woodside Energy WDS made a final investment decision to build the first 2.2-bcfd phase of its proposed 3.6-bcfd Louisiana LNG export plant in Louisiana. The company expects to produce first LNG from the roughly $17.5 billion project in 2029.

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 nine-month low of around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and near an 11-month low of around $11 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.