US natgas prices climb 2% to two-week high on lower output, higher demand forecasts

U.S. natural gas futures climbed about 2% to a two-week high on Thursday on a drop in output over the last few days and forecasts for more demand over the next two weeks than previously expected.

The gas price increased despite a roughly 7% drop in oil futures CL1!, BRN1! on worries U.S. President Donald Trump's tariffs could reduce global economic growth and oil demand, while the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia, a group known as OPEC+, plan to keep increasing world oil supplies.

Gas futures NG1! for May delivery on the New York Mercantile Exchange rose 8.3 cents, or 2.0%, to $4.138 per million British thermal units, their highest close since March 19.

Gas prices also increased despite a bigger-than-expected storage build last week when mild weather kept heating demand low.

The U.S. Energy Information Administration (EIA) said energy firms added 29 billion cubic feet of gas into storage during the week ended March 28.

That was slightly bigger than the 25-bcf build analysts forecast in a Reuters poll and compares with a decrease of 37 bcf during the same week last year and a five-year average draw of 13 bcf for this time of year.

Energy traders said mild weather and low demand last month likely allowed utilities to add gas to storage in March for the first time since 2012 and only the second time in history.

Gas stockpiles, however, were still about 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 fell to 105.1 billion cubic feet per day so far in April, down from a record 106.2 bcfd in March.

On a daily basis, output was on track to drop by about 2.4 bcfd over the last four days to a preliminary five-week low of 104.6 bcfd on Thursday. Analysts noted preliminary data is often revised later in the day.

Meteorologists projected temperatures in the Lower 48 states would remain mostly near normal through April 18.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 103.7 bcfd this week to 106.4 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.

The average amount of gas flowing to the eight big operating U.S. LNG export plants fell to 15.4 bcfd so far in April, down from a record 15.8 bcfd in March.

The decline came despite an expected increase in flows to Cheniere Energy's LNG 4.5-bcfd Sabine plant in Louisiana to 4.4 bcfd on Thursday from 3.9 bcfd on Wednesday, and record flows of 2.2 bcfd to Venture Global's VG 3.2-bcfd Plaquemines LNG plant under construction in Louisiana.

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 traded around $13 per mmBtu at both the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.