US natgas futures slide as output slowly rises, LNG exports remain low

US natural gas futures slipped on Friday as output slowly rises while liquefied natural gas (LNG) exports hold at their lowest since early 2018.

That lower price move comes despite forecasts the hotter-than-normal weather will continue through late July, prompting consumers to keep their air conditioners cranked up.

Front-month gas futures fell 2.6 cents, or 1.5%, to $1.753 per million British thermal units at 8:10 a.m. EDT (1210 GMT). For the week, the contract was up less than 1%, putting it on track for a second gain after soaring 16% last week.

Refinitiv said production in the Lower 48 US states averaged 88.1 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November.

As the weather heats up, Refinitiv forecast US demand, including exports, will rise from 89.3 bcfd this week to 91.4 bcfd next week and 93.3 bcfd in two weeks.

Pipeline gas flowing to US LNG export plants averaged just 3.1 bcfd (32% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport LNG in Texas fell to zero for a fourth day in a row the first time since July 2019 when its first liquefaction train was still in test mode.

US pipeline exports, meanwhile, were mixed.

Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.4 bcfd for a second month in a row, which is down from a record 5.6 bcfd in March.