US natgas futures slide to fresh 25-year low as stockpiles fill

US natural gas futures slipped to a fresh near 25-year low on Friday as the market focuses on demand destruction from the coronavirus, swelling stockpiles and lower liquefied natural gas exports earlier in the month.

That price decline, however, comes despite a slowdown in output, a rise in pipeline and LNG exports over the past week and an increase in cooling demand with the coming of hot summer weather.

On its last day as the front-month, gas futures for July fell 2.4 cents, or 1.6%, to $1.458 per million British thermal units at 8:08 a.m. EDT (GMT), their lowest since August 1995.

August futures, which will soon be the front-month, were flat at $1.54 per mmBtu.

With ongoing government lockdowns keeping many businesses shut and US LNG exports down by half since the start of the year, stockpiles are filling fast and are expected to reach a record 4.1 trillion cubic feet by the end of October.

Refinitiv said production in the Lower 48 US states averaged 87.7 billion cubic feet per day (bcfd) in June, down from a 16-month low of 88.2 bcfd in May and an all-time monthly high of 95.4 bcfd in November.

As the weather heats up, Refinitiv forecast US demand, including exports, would rise from 84.8 bcfd this week to 86.2 bcfd next week and 89.4 bcfd in two weeks.

Pipeline gas flowing to US LNG export plants averaged 4.1 bcfd (42% utilization) in June, down from an eight-month low of 6.4 bcfd in May and a record high of 8.7 bcfd in February. Utilization was 90% in 2019.

On a daily basis, however, LNG exports rose to a three-week high of 4.9 bcfd on Thursday as flows to Cameron in Louisiana hit a record high. That is up from a 14-month low of 3.6 bcfd last week.