US natgas fall to 2-week low on mild weather, falling LNG exports

US natural gas futures fell on Friday to a two-week low on forecasts for milder weather and weaker cooling demand than previously expected, and declining liquefied natural gas (LNG) exports.

Front-month gas futures fell 8.2 cents, or 4.5%, to settle at $1.731 per million British thermal units, their lowest since May 27.

Refinitiv said production in the Lower 48 US states fell to an average of 88.6 billion cubic feet per day in June from a one-year low of 89.2 bcfd in May and an all-time monthly high of 95.4 bcfd in November.

With milder weather expected in mid-June, Refinitiv forecast US demand, including exports, would slide from 82.5 bcfd this week to 79.1 bcfd next week before rising to 85.4 bcfd in two weeks as the weather warms again.

The amount of pipeline gas flowing to US LNG export plants fell to an average of 4.1 bcfd (42% utilization) in June, down from an eight-month low of 6.4 bcfd in May and a monthly record high of 8.7 bcfd in February. Utilization was near 90% in 2019.

US LNG exports dropped in recent months as buyers canceled dozens of cargoes for the summer with US gas prices trading mostly higher than in Europe since late April due to demand destruction from the coronavirus and record-high European stockpiles.

Those higher US prices prompted some energy firms to send LNG to the United States for storage.

US pipeline exports, however, are rising as North American consumers crank up their air conditioners.

Refinitiv said pipeline exports to Canada averaged 2.3 bcfd in June, up from a seven-month low of 2.2 bcfd in May but still well below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.4 bcfd this month, up from 4.8 bcfd in May but shy of the record 5.6 bcfd in March.