US natgas prices edge up on output decline

By Scott DiSavino

U.S. natural gas futures edged up about 1% on Tuesday on a drop in output in recent weeks.

That small price increase came despite forecasts for lower demand over the next two weeks than previously expected due in part to a decline in gas flows to liquefied natural gas export plants during the spring maintenance season.

Gas futures NG1! for June delivery on the New York Mercantile Exchange fell 4.2 cents, or 1.2%, to $3.688 per million British thermal units at 9:00 a.m. EDT (1300 GMT).

Analysts said mostly mild weather should keep heating and cooling demand low in coming weeks, allowing utilities to continue injecting more gas into storage than normal for this time of year.

Gas stockpiles were already about 3% above the five-year (2020-2024) normal.

Looking ahead, analysts said the roughly 12% drop in U.S. crude futures CL1! so far in 2025 should prompt drillers to cut back on oil production.

Any decline in oil production would also reduce the amount of gas pulled out of the ground that is associated with that oil output. About 37% of U.S. gas production comes from associated gas, according to federal energy data.

Over time, analysts said any reduction in associated gas output should increase gas prices.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 103.7 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 from a record 107.4 bcfd on April 18 to a preliminary 11-week low of 102.2 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 28.

With warmer weather starting to boost air conditioning use, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 96.4 bcfd this week to 97.4 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 15.1 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.

The LNG feedgas decline so far this month was mostly due to reductions for maintenance at Cameron LNG's 2.0-bcfd plant in Louisiana and Cheniere Energy's LNG 3.9-bcfd Corpus Christi plant under construction and in operation in Texas, and a one-day outage at Freeport LNG's 2.1-bcfd plant in Texas on May 6.

LNG gas flows to Corpus were on track to drop to a two-month low of 1.5 bcfd on Tuesday, down from 1.9 bcfd on Monday and an average of 2.0 bcfd during the prior seven days, according to LSEG data.

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 $12 per mmBtu at the Dutch Title Transfer Facility (TRNLTTFMc1) benchmark in Europe and $11 at the Japan Korea Marker (JKMc1) benchmark in Asia.