NEW YORK: US natural gas futures slid about 3% on Friday on rising output and forecasts for lower demand next week than previously expected.
That price decline came despite rising flows to liquefied natural gas (LNG) export plants and forecasts for colder weather over the next two weeks.
Front-month gas futures for March delivery on the New York Mercantile Exchange fell 9.9 cents, or 2.9%, to settle at $3.309 per million British thermal units (mmBtu). On Thursday, the contract closed at its highest since January 29 for a second day in a row.
For the week, the front-month was up about 9% after dropping about 24% last week.
Financial firm LSEG said average gas output in the Lower 48 US states rose to 106.1 billion cubic feet per day (bcfd) so far in February, up from 102.7 bcfd in January when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.
On a daily basis, output was on track to fall by 1.1 bcfd to a preliminary one-week low of 105.4 bcfd on Friday. That compares with a daily record high of 106.5 bcfd on January 31. Analysts noted preliminary data is often revised later in the day.
After extreme cold last month boosted heating demand to an all-time high, analysts said energy firms may have pulled a record amount of gas out of storage in January. The current record monthly storage withdrawal is 994 bcf in January 2022, according to federal energy data.
Meteorologists projected weather in the Lower 48 states would remain mostly colder than normal through February 22.
With colder weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, will rise from 124.3 bcfd this week to 133.4 bcfd next week and 133.9 bcfd in two weeks. The forecast for next week was lower than LSEG’s outlook on Thursday.
The amount of gas flowing to the eight big US LNG export plants rose to an average of 15.1 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.
The US became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading at a 15-month high of around $17 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and an eight-week high of around $15 at the Japan Korea Marker (JKM) benchmark in Asia.
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