NEW YORK: US natural gas futures slid about 2% on Wednesday on record output and forecasts for milder weather over the next two weeks than previously expected, which should allow utilities to pull less gas out of storage to heat homes and businesses than normal for this time of year.
On its last day as the front-month, gas futures for March delivery on the New York Mercantile Exchange fell 6.9 cents, or 1.7%, to $4.105 per million British thermal units (mmBtu) by 7:50 a.m. EST (1250 GMT).
Futures for April, which will soon be the front-month, were trading down about 1.5% at $4.07 per mmBtu.
That price decline came despite record gas flows to liquefied natural gas (LNG) export plants.
Traders also noted extreme cold earlier this year forced energy firms to pull huge amounts of gas out of storage, including record amounts in January, cutting stockpiles to about 11% below the five-year (2020-2024) usual.
Financial company LSEG said average gas output in the Lower 48 US states rose to 104.6 billion cubic feet per day (bcfd) so far in February 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.
Over the past couple of weeks, output dropped from a record daily high of 106.7 bcfd on February 6 to a three-week low of 100.5 bcfd on February 19 as extreme cold froze wells before rising to a two-week high of 104.8 bcfd on February 25 as milder weather unfroze those wells.
Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through March 13.
With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 127.3 bcfd this week to 119.1 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.
The amount of gas flowing to the eight big US LNG export plants rose to an average of 15.6 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.
On a daily basis, LNG feedgas slid from a record 16.4 bcfd on February 23 to a preliminary two-week low of 15.3 bcfd on Wednesday on signs of a reduction at Cameron LNG’s 2.0-bcfd export plant in Louisiana. Analysts noted preliminary data is often changed later in the day.
Gas flows to Cameron slid to a preliminary 10-week low of 1.6 bcfd on Wednesday, down from an average of 2.4 bcfd over the past seven days. Officials at Cameron were not immediately available for comment.
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