NEW YORK: US natural gas futures slid over 2% to a fresh one-week low on Tuesday as warmer weather allows producers to return to service more wells and pipelines that were frozen during last week’s extreme cold.
That small decline comes despite forecasts for higher demand next week as liquefied natural gas (LNG) exports rise.
On their second to last day as the front-month, gas futures for March delivery fell 7.4 cents, or 2.5%, to settle at $2.879 per million British thermal units, their lowest close since Feb. 11 for a second day in a row.
April futures, which will soon be the front-month, lost 8 cents to $2.86 per mmBtu.
Data provider Refinitiv said output in the Lower 48 US states has averaged 85.2 billion cubic feet per day (bcfd) so far in February. Traders noted that was down from 91.1 bcfd in January, due to massive freezing of wells and pipelines last week. Output hit an all-time monthly high of 95.4 bcfd in November 2019.
On a daily basis, production was on track to jump to 87.5 bcfd on Tuesday as the weather warms, its highest since Feb. 11 before last week. During last week’s freeze, daily output dropped as low as 72.9 bcfd on Feb. 17, the lowest since August 2017, according to Refinitiv data.
Refinitiv projected average gas demand, including exports, would fall from 117.0 bcfd this week to 109.1 bcfd next week as the weather turns milder. That forecast for next week was higher than Refinitiv projected on Monday due mostly to rising LNG exports.
The amount of feedgas flowing to US LNG export plants averaged 8.4 bcfd so far in February, down from 10.4 bcfd in January and a monthly record high of 10.7 bcfd in December. Exports dropped this month after several Gulf Coast plants shut or reduced output after the extreme cold cut available power and gas supplies.