US natgas prices slide 3% on lower flows to LNG export plans and forecasts for less demand

By Scott DiSavino

U.S. natural gas futures fell about 3% on Tuesday on forecasts for lower demand over the next two weeks than previously expected and less gas flowing to liquefied natural gas (LNG) export plants.

A couple of energy traders said gas prices also fell due to unconfirmed rumors that Freeport LNG's 2.1-bcfd export plant in Texas might have shut. Officials at Freeport said they had no comment.

Gas futures NG1! for June delivery on the New York Mercantile Exchange fell 8.7 cents, or 2.5%, to settle at $3.463 per million British thermal units.

The premium of futures for July over June (NGM25-N25) rose to a record 35 cents per mmBtu.

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

Gas stockpiles were around 1% above the five-year normal.

Inventories 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 103.6 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.

Since gas output hit a daily record high of 17.4 bcfd on April 18, production was on track to drop by around 4.8 bcfd to a preliminary 10-week low of 102.6 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 than normal through May 21.

LSEG forecast average gas demand in the Lower 48, including exports, will slide from 96.3 bcfd this week to 94.7 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.

The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 15.2 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.

On a daily basis, LNG feedgas was on track to drop to a preliminary seven-week low of 14.2 bcfd on Tuesday due mostly to a decline in flows to Cameron LNG's 2.0-bcfd plant in operation in Louisiana and Cheniere Energy's LNG 3.9-bcfd Corpus Christi plant, with some units in service and others under construction, in Texas.

Gas flows to Cameron were on track to hold around 1.1 bcfd on Monday and Tuesday, down from an average of 1.8 bcfd over the prior seven days, while flows to Corpus were on track to drop to 1.5 bcfd on Tuesday, down from an average of 2.2 bcfd over the prior seven days.

Officials at Cameron LNG were not immediately available for comment, while officials at Cheniere had no comment on the feedgas reductions. The companies, however, have told customers in separate postings that they were conducting maintenance of pipelines and other equipment that supplies gas to their plants.

Energy traders noted the feedgas reductions and pipeline work were likely all part of normal spring and autumn maintenance when demand for gas for heating and cooling is low.