U.S. natural gas futures experienced a slight decline of about 1% on Tuesday. This drop was mainly attributed to forecasts predicting lower demand in the upcoming two weeks compared to previous expectations, as well as reduced gas flow to liquefied natural gas (LNG) export facilities due to spring maintenance. Notably, this price decrease occurred even with a consistent decline in output observed over recent weeks.
On the New York Mercantile Exchange, natural gas futures for June delivery decreased by 2.0 cents, or 0.6%, settling at $3.53 per million British thermal units. The futures for July saw a rise, exceeding June prices by a record 34 cents per million British thermal units. According to analysts, the mild weather anticipated until late May is likely to sustain low heating and cooling demands, allowing utilities to inject more gas into storage than usual for this season.
Current gas stockpiles are about 1% above the five-year average. In terms of supply and demand, financial firm LSEG reported that the average gas output in the Lower 48 states has dropped to 103.6 billion cubic feet per day in May, down from a record high of 105.8 billion cubic feet per day in April. Following the peak output on April 18, further production declines are expected, potentially reaching a ten-week low by Tuesday.
Meteorologists anticipate warmer-than-normal temperatures in the Lower 48 states through May 21. LSEG predicts average gas demand, including exports, will decrease from 96.3 billion cubic feet per day this week to 94.7 billion cubic feet per day next week. Additionally, the amount of gas flowing to key LNG export plants in the U.S. has averaged 15.2 billion cubic feet per day in May, down from an April record of 16.0 billion cubic feet per day.
Notably, feedgas flows to Cameron LNG and Cheniere Energy’s Corpus Christi facilities have declined due to maintenance, a routine procedure typically conducted during lower-demand seasons. In 2023, the U.S. emerged as the leading LNG supplier globally, overtaking Australia and Qatar, driven by increased export demands amid global price surges and geopolitical factors.