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(Reuters) – U.S. natural gas futures fell about 6% to a nine-week low on Monday on record output over the weekend and forecasts for less demand next week than previously expected.
Gas futures for May delivery on the New York Mercantile Exchange fell 20.2 cents, or 5.7%, to settle at $3.325 per million British thermal units, their lowest close since February 7.
The price drop came despite record flows to liquefied natural gas export plants and forecasts for higher gas demand this week than previously expected.
Gas stockpiles were currently about 4% below normal levels for this time of year, after cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January.
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.3 billion cubic feet per day so far in April, up from a monthly record of 106.2 bcfd in March.
On a daily basis, output hit a record 107.4 bcfd on Saturday and Sunday, topping the prior all-time high of 107.3 bcfd on March 24.
Looking forward, however, analysts said energy firms could cut back on oil drilling in coming weeks due to the roughly 14% drop in U.S. crude futures so far in April. The crude price drop was related in part to uncertainty tied to U.S. President Donald Trump’s on-again off-again trade tariffs.
Any reduction in oil drilling in shale basins such as the Permian in Texas and New Mexico and the Bakken in North Dakota could boost gas prices by cutting gas output associated with that production.
WARMER WEATHER COMING
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through April 29.
With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 101.0 bcfd this week to 97.2 bcfd next week. The forecasts for this week were higher than LSEG’s outlook on Friday, while its forecast for next week was lower.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. climbed from a monthly record of 15.8 bcfd in March to 16.3 bcfd so far in April, on rising flows to Venture Global’s 3.2-bcfd Plaquemines export plant under construction in Louisiana.
The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading around $12 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and at an eight-month low of around $13 at the Japan Korea Marker (JKM) benchmark in Asia.
Reporting by Scott DiSavino; Editing by David Holmes and Leslie Adler
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