U.S. natural gas futures experienced a significant decline of approximately 4% on Thursday, reaching a five-month low. This drop was prompted by a larger-than-anticipated weekly storage build and forecasts of mild weather, which are expected to result in low heating and cooling demand in the upcoming weeks. According to the U.S. Energy Information Administration (EIA), energy companies added 88 billion cubic feet of gas to storage for the week ending April 18. This figure surpassed analysts’ expectations of a 64-bcf build, and it also outpaced last year’s increase of 86 bcf for the same week, as well as the five-year average build of 58 bcf for this time of year.
Analysts attributed the substantial storage build to a combination of high renewable power generation and moderate weather conditions. This trend is expected to continue, enabling utilities to increase gas storage levels above normal in the near future. Currently, U.S. gas stockpiles are about 2% below usual levels for this period, largely due to heavy withdrawals resulting from cold weather in January and February. On the New York Mercantile Exchange, gas futures for May delivery fell by 11.7 cents, or 3.9%, to $2.905 per million British thermal units.
This decline indicates the contract is on track for its lowest close since November 15. The front-month contract has been in technically oversold territory for six consecutive days, a trend that hasn’t occurred since February 2024. In terms of supply and demand, average gas output in the Lower 48 states increased to 106.5 billion cubic feet per day in April, up from a record 106.2 bcfd in March. However, preliminary data indicate a daily output decline to around 105.1 bcfd as of Thursday, partly due to maintenance work on Kinder Morgan’s pipeline.
Meanwhile, average gas demand, including exports, is projected to hold steady this week. With the U.S. becoming the largest LNG supplier globally, gas prices in Europe and Asia have also reached notable lows.