US natural gas futures fell about 3% on Wednesday as government lockdowns to stop the spread of coronavirus cut demand for the fuel and exports.
That decline comes even though energy firms continued to cut production in response to the collapse in oil and gas prices earlier this year, which ironically was also due in part to demand destruction from the pandemic.
Front-month gas futures for June delivery on the New York Mercantile Exchange fell 5.9 cents, or 3.2%, to settle at $1.771 per million British thermal units.
Analysts said they expect prices to rise as governments lift travel restrictions and economies rebound. Futures for the balance of 2020 and calendar 2021 were trading about 25% and 50% over the front-month, respectively.
Data provider Refinitiv said average gas output in the US Lower 48 states fell to 89.7 billion cubic feet per day (bcfd) so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4 bcfd in November.
Refinitiv projected demand in the Lower 48, including exports, would slip from 78.7 bcfd this week to 78.4 bcfd next week. That compares with Refinitiv's forecasts on Tuesday of 78.2 bcfd this week and 78.1 bcfd next week.
Refinitiv said US pipeline exports to Canada averaged 2.2 bcfd so far in May, down from 2.4 bcfd in April and an all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 4.6 bcfd so far this month, down from 4.7 bcfd in April and a record 5.6 bcfd in March.
US LNG exports averaged 6.7 bcfd so far in May down from a four-month low of 8.1 bcfd in April and a record 8.7 bcfd in February.