U.S. natural gas futures edged up about 1% to a four-week high on Tuesday on a preliminary daily output decline and forecasts for more cool weather and heating demand over the next week or so.
Prices also gained support as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG’s export plant in Texas exited an eight-month outage in February.
Front-month gas futures for May delivery on the New York Mercantile Exchange rose 2 cents, or 0.9%, to $2.295 per million British thermal units at 9:09 a.m. EDT (1309 GMT), putting it on track for its highest close since March 21 for a second day in a row.
That also set the front-month on track to rise for a third consecutive day for the first time since early March, gaining 15% during that time.
In addition, the contract moved closer to topping its 50-day moving average, a key point of technical resistance, for the first time since mid-December.
Freeport LNG’s export plant, which shut in June 2022 after a fire, was on track to pull in about 2.2 billion cubic feet per day (bcfd) of gas on Tuesday, the same amount it has pulled in over the past two weeks, according to data provider Refinitiv.
That was above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce LNG.
Average gas flows to all seven big U.S. LNG export plants rose to 14.1 bcfd so far in April, up from a record 13.2 bcfd in March.
The seven big U.S. LNG export plants can turn about 13.8 bcfd of gas into LNG.
SUPPLY AND DEMAND
Refinitiv said average gas output in the U.S. Lower 48 states rose to 100.1 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January.
On a daily basis, however, output was on track to drop about 1.7 bcfd to a preliminary one-month low of 98.9 bcfd on Tuesday due mostly to declines in Pennsylvania and West Virginia.
That would be the biggest one-day output drop since late January. Energy analysts, however, noted preliminary data is often revised later in the day.
Meteorologists projected the weather in the Lower 48 states would remain mostly colder than normal from April 18-25 before turning near normal from April 26-May 3.
Even though the weather will remain cooler than normal into next week, Refinitiv forecast U.S. gas demand, including exports, would ease from 95.8 bcfd this week to 95.5 bcfd next week due to an expected decline in gas flows to LNG plants.
The demand forecast for next week was lower than Refinitiv’s outlook on Monday.
Mostly mild weather during the winter of 2022-2023 allowed utilities to leave more gas in storage than usual.
Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended April 7 and were expected to end about 23% above normal during the warmer-than-normal week ended April 14, according to federal data and analysts’ estimates.