NEW YORK: US natural gas futures slid about 3% on Wednesday on signs some drillers were starting to pull more gas out of the ground and worries about the tremendous oversupply of gas still in storage.
That price decline came despite forecasts for more demand next week than previously expected and as more gas flowed to liquefied natural gas (LNG) export plants.
Analysts forecast gas stockpiles were about 27% above normal levels for this time of year.
On its last day as the front-month, gas futures for June delivery on the New York Mercantile Exchange fell 6.4 cents, or 2.5%, to $2.526 per million British thermal units (mmBtu) at 9:11 a.m. EDT (1311 GMT).
Futures for July, which will soon be the front-month, were down 2.6% at $2.75 per mmBtu.
In other news, over 512,000 homes and businesses were still without power in Texas and other states due to severe storms over the past several days.
Gas output in the Lower 48 US states fell to an average of 97.7 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April, according to financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023.
But on a daily basis, output was up about 0.5 bcfd since hitting a 15-week low of 96.3 bcfd on May 1. Energy traders said that increase was a sign that the 56% gain in futures prices over the past four weeks prompted some drillers to start producing more gas.
Overall, however, US gas production was still down around 9% so far in 2024 as several energy firms, including EQT and Chesapeake Energy, delayed well completions and cut other drilling activities after prices fell to 3-1/2-year lows in February and March.
EQT is the biggest US gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy.
Meteorologists projected weather across the Lower 48 states would remain mostly near normal until June 2 before turning warmer than normal from June 3-13.
LSEG forecast gas demand in the Lower 48, including exports, would rise from 93.6 bcfd this week to 94.1 bcfd next week. The forecast for next week was higher than LSEG’s outlook on Tuesday.
Gas flows to the seven big US LNG export plants rose from an average of 11.9 bcfd in April to 12.8 bcfd so far in May with the return of Freeport LNG’s 2.1-bcfd plant in Texas.
That LNG feedgas, however, remained down from the monthly record of 14.7 bcfd in December due to ongoing spring maintenance at Kinder Morgan’s Elba Island in Georgia and several plants in Louisiana, including Cameron LNG, Cheniere Energy’s Sabine Pass and Venture Global’s Calcasieu Pass.