U.S. natural gas futures climbed about 3% on Thursday on forecasts for cooler weather and more demand next week than previously expected and with an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants, including Freeport LNG.
That price rise also came ahead of a federal storage report expected to show that last week’s storage increase was smaller than usual as low prices so far this year have prompted producers to cut gas output.
Analysts forecast U.S. utilities added about 50 billion cubic feet (bcf) of gas into storage during the week ended April 12. That compares with an increase of 61 bcf in the same week last year and a five-year (2019-2023) average rise of 61 bcf for this time of year.
If correct, that would leave gas stockpiles about 36% above normal levels for this time of year.
U.S. gas production fell by around 10% so far this year as several energy firms, including EQT and Chesapeake Energy, delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in February and March.
EQT is currently the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy.
Front-month gas futures for May delivery on the New York Mercantile Exchange were up 4.9 cents, or 2.9%, to $1.761 per million British thermal units (mmBtu) at 9:17 a.m. EDT (1417 GMT).
In the spot market, next-day gas prices at the Waha hub in the Permian Shale in West Texas rose to negative 88 cents per mmBtu on April 17, up from negative $1.13 on April 16 and a near four-year low of negative $2.86 on April 15, according to data from SNL Energy on the LSEG terminal.
Spot power and gas prices have traded below zero in several parts of the country, including Texas, California and Arizona, in recent weeks.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 98.3 billion cubic feet per day (bcfd) so far in April, down from 100.8 bcfd in March. That compares with a monthly record of 105.6 bcfd in December 2023.
On a daily basis, however, output was on track to drop by about 2.8 bcfd over the past six days to a preliminary three-month low of 95.8 bcfd on Thursday.
Meteorologists projected weather across the Lower 48 states would remain mostly near normal through April 26 before turning warmer than normal from April 27-May 3.
LSEG forecast gas demand in the Lower 48, including exports, would rise from 91.8 bcfd this week to 95.9 bcfd next week. The forecast for next week was higher than LSEG’s outlook on Wednesday.
Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants slid to an average of 11.9 bcfd so far in April, down from 13.1 bcfd in March. That compares with a monthly record of 14.7 bcfd in December.
On a daily basis, LNG feedgas was on track to rise to a preliminary 10.8 bcfd on Thursday, up from 10.1 bcfd on Wednesday and a 15-month low of 9.2 bcfd on Tuesday when feedgas declined at several facilities, including Freeport LNG in Texas, Cameron LNG in Louisiana, and Cheniere Energy’s Sabine Pass in Louisiana and Corpus Christi in Texas.
Since Tuesday, gas flows have increased to all of those plants, including Freeport. Feedgas at Freeport was on track to reach 0.3 bcfd on Thursday, up from near zero over the prior seven days.
(Reporting by Scott DiSavino; editing by Jonathan Oatis)