U.S. natural gas futures eased on Thursday, having hit their lowest in a month earlier in the session, as the federal data showing a bigger-than-expected storage build last week added pressure to the market.
Front-month gas futures for May delivery on the New York Mercantile Exchange traded 1.9 cents lower, or 1.1%, to $1.63 per million British thermal units (mmBtu) at 10.58 a.m. EDT.
The U.S. Energy Information Administration (EIA) said utilities added a larger-than-expected 92 billion cubic feet (bcf) of gas out of storage during the week ended April 19.
That was more than the 82-bcf injection analysts forecast in a Reuters poll, and compares with a injection of 77 bcf during the same week a year ago and a five-year (2019-2023) average increase of 59 bcf for this time of year.
The infusion left gas stockpiles about 22% above normal levels for this time of year.
“Injection number came in higher than expected and so it’s way above the seasonal average and it’s reminding people that there’s still a glut of natural gas,” said Phil Flynn, an analyst at Price Futures Group.
LSEG forecasts gas demand in the Lower 48 states, including exports, to fall to 91.6 bcfd next week, from 97.4 bcfd this week.
“The power burn is incredible, and it seems that the demand for natural gas is stronger because of the low prices and we’re still in the process of the supply side catching up with the demand side,” Flynn added.
Financial company LSEG said gas output in the Lower 48 U.S. states had fallen to an average of 96.8 billion cubic feet per day (bcfd) in April from 100.8 bcfd in March. That compares with a monthly record of 105.6 bcfd in December 2023.
On a daily basis, LNG feedgas was at 11.3 bcfd as the amount of gas flowing to Freeport LNG fell to 0.1 bcfd from 0.5 bcfd on Monday.
However, the first tanker set sail from Freeport LNG’s Texas export terminal on Tuesday, raising hopes of a resumption of gas processing after an outage earlier this month.
“The (natgas) prices have stabilized between $1.60/mmbtu and $2/mmbtu and remain weak for several reasons, including continued warmer than normal weather, which has curbed heating and power demand in March and April, and an extended outage at the Freeport LNG facility, which curbed feedgas demand by +100 Bcf since January,” BofA Research said in a note dated Wednesday.
U.S. gas production has dropped by around 10% in 2024 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 the biggest U.S. gas producer, but Chesapeake is on track to claim that title after its merger with Southwestern Energy.
Meanwhile, in Europe gas prices continued an upwards trend for the second session in a row due to outages in Norway, which reduced pipeline gas supply.
(Reporting by Daksh Grover in Bengaluru; editing by Barbara Lewis and Marguerita Choy)