Financial firm LSEG said average gas output in the Lower 48 US states fell to 105.1 billion cubic feet per day so far in May, down from a monthly record high of 105.8 bcfd in April.
SEATTLE (Oil Monster): US natural gas futures slid about 2 per cent on Friday on higher than expected output and a drop in the amount of gas flowing to LNG export plant during spring maintenance. Also weighing on prices, US President Donald Trump's administration ordered exporters to seek a license to ship ethane to China.
Analysts said if energy firms have difficulty selling ethane, they will likely allow it to flow into US gas pipelines, which would increase the supply of gas available and pressure prices. Gas futures for July delivery on the New York Mercantile Exchange fell 7.5 cents, or 2.1 per cent, to settle at $3.447 per million British thermal units.
For the week, the front-month was up about 3 per cent after holding steady in the prior week.
For the month, the contract was up about 4 per cent after falling 19 per cent in April.
Looking ahead, the premium of futures for October 2025 over November 2025 rose to its highest since October 2023 due to bigger increases in the November contract than the October contract. That means the market is likely betting on higher demand and/or lower amounts of gas in storage going into next winter.
Gas stockpiles were around 4 per cent above the five-year (2020-2024) average, and expected to keep growing with energy firms expected to inject more gas than usual into storage again during the week ended May 30 for a seventh week in a row.
Supply and demand
Financial firm LSEG said average gas output in the Lower 48 US states fell to 105.1 billion cubic feet per day so far in May, down from a monthly record high of 105.8 bcfd in April. Energy traders said output reductions this month were primarily due to normal spring maintenance on gas pipelines, including US energy firm Kinder Morgan's 2.7-bcfd Permian Highway from the Permian Basin in West Texas to the Texas Gulf Coast. Energy firms usually work on gas pipes when demand is low in the spring and autumn.
Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 14. LSEG forecast average gas demand in the Lower 48, including exports, will rise from 95.8 bcfd this week to 96.3 bcfd next week and 100.3 bcfd in two weeks. The forecast for this week was higher than LSEG's outlook on Thursday.
The average amount of gas flowing to the eight big LNG export plants operating in the US fell to 15.1 bcfd so far in May, down from a monthly record high of 16.0 bcfd in April. On a daily basis, LNG feedgas was on track to fall from 14.7 bcfd on Thursday to a preliminary three-week low of 13.9 bcfd on Friday due primarily to reductions at Cheniere Energy's plants. Gas flows to Cheniere's 4.5-bcfd Sabine Pass in Louisiana were on track to drop from 3.9 bcfd on Thursday to an 11-month low of 3.7 bcfd on Friday, while feedgas to the company's 3.9-bcfd Corpus Christi in Texas was on track to drop from 2.1 bcfd on Thursday to a two-week low of 1.6 bcfd on Friday.
Energy traders have said they expect total LNG feedgas to remain below April's record high in June now that Cheniere has started maintenance on liquefaction trains and other equipment at Sabine. That work is expected to last about three weeks until around June 22.
Courtesy: www.reuters.com
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