US natgas prices hold at 5-month low on near record output, mild forecasts

U.S. natural gas futures held at a five-month low on Tuesday on near record output so far this month and forecasts for mild weather that should keep both heating and cooling demand low through early May.

Gas futures NG1! for May delivery on the New York Mercantile Exchange fell 0.9 cents, or 0.3%, to settle at $3.007 per million British thermal units, their lowest close since November 19 for a second day in a row.

That kept the front-month in technically oversold territory for a fourth straight day for the first time since October 2024.

Analysts noted mild weather expected through early May should allow utilities to keep injecting lots of gas into storage.

U.S. gas stockpiles were currently around 7% 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 rose to 106.5 billion cubic feet per day in April from a monthly record of 106.2 bcfd in March.

On a daily basis, output was on track to fall by around 2.0 bcfd over the past four days to a preliminary one-week low of 105.0 bcfd on Tuesday, down from a record 108.0 bcfd on April 18. Traders noted preliminary data is often revised later in the day.

Part of the reason for that output reduction was maintenance on U.S. energy firm Kinder Morgan's KMI 2.7-bcfd Permian Highway gas pipe from the Permian basin in West Texas to the Texas Gulf Coast. Kinder Morgan has said it will be performing a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.

Traders noted the Permian Highway reduction was also part of the reason why spot gas prices at the Waha Hub < (NG-WAH-WTX-SNL) slid to a three-week low of around 73 cents per mmBtu for Tuesday, down from 97 cents for Monday and an average of $1.64 over the prior seven days.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 7.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 98.2 bcfd this week to 98.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Monday.

The average amount of gas flowing to the eight big LNG export plants operating in the U.S. climbed from a monthly record of 15.8 bcfd in March to 16.1 bcfd so far in April on rising flows to Venture Global's VG 3.2-bcfd Plaquemines export 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 was trading around $12 per mmBtu at both the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.