NEW YORK: US natural gas futures held near a 14-week high on Thursday on forecasts for more demand over the next two weeks than previously expected and a continued decline in output.
The demand forecasts were mostly higher as the amount of gas flowing to liquefied natural gas (LNG) export plants rose with the return to near full service of Freeport LNG’s plant in Texas.
Limiting those price gains was the tremendous oversupply of gas in storage. Analysts forecast the amount of gas in storage was around 31% above normal levels for this time of year.
Front-month gas futures for June delivery on the New York Mercantile Exchange were down 0.6 cents, or 0.3%, to $2.295 per million British thermal units (mmBtu) at 10:44 a.m. EDT (1444 GMT). On Thursday, the contract closed at its highest price since Jan. 29.
That kept the contract in overbought territory for a sixth day in a row for the first time since October 2023.
For the week, the contract was up about 7% after soaring by a record 33% last week.
US gas production is down about 9% so far in 2024 after 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 US gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy.
Financial firm LSEG said gas output in the Lower 48 US states has fallen to an average of 96.9 bcfd so far in May, down from 98.2 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023.
On a daily basis, output was on track to drop by around 1.9 bcfd over the past seven days to a preliminary 16-week low of 96.0 bcfd on Friday.
Meteorologists projected weather across the Lower 48 states would remain mostly near normal through May 25.
LSEG forecast gas demand in the Lower 48, including exports, would slide from 94.3 bcfd this week to 92.2 bcfd next week and 91.1 bcfd in two weeks. The forecasts for this week and next were higher than LSEG’s outlook on Thursday.
Gas flows to the seven big US LNG export plants have risen from an average of 11.9 bcfd in April to 12.5 bcfd so far in May with the return of Freeport LNG’s plant in Texas from maintenance and inspection work. That compares with a monthly record of 14.7 bcfd in December.
The amount of gas flowing to the 2.1-bcfd Freeport plant was on track to rise to a 16-week high of 2.0 bcfd, up from an average of 1.4 bcfd over the past week and 0.4 bcfd in April.
The US became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $9 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $10 at the Japan Korea Marker (JKM) benchmark in Asia.
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