US natgas flat as higher oil prices offset milder weather

US natural gas futures held steady on Wednesday as higher oil prices offset forecasts for milder weather and lower demand over the next two weeks than previously expected.

Front-month gas futures remained unchanged at $2.958 per million British thermal units at 8:51 a.m. EDT (1251 GMT).

US crude futures, meanwhile, rose over $1 a barrel earlier in the day on signs of a speedy economic recovery and upbeat forecasts for energy demand.

Data provider Refinitiv said gas output in the Lower 48 US states averaged 90.8 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April, but still well below November 2019's monthly record of 95.4 bcfd.

Refinitiv projected average gas demand, including exports, would fall from 87.0 bcfd this week to 81.4 bcfd next week as the weather turns milder. Those forecasts were lower than Refinitiv estimated on Tuesday.

The amount of gas flowing to US LNG export plants averaged 11.3 bcfd so far in May, down from April's monthly record of 11.5 bcfd.

Buyers around the world continue to purchase near-record amounts of US gas because prices in Europe and Asia remain high enough to justify the cost of buying and transporting the US fuel across the ocean.

Traders, however, said US LNG exports cannot rise much more until new units enter service in late 2021/early 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants pull in a little more gas than they export because some of the fuel is used to run the facility.

US pipeline exports to Mexico averaged 6.0 bcfd so far in May, down from April's monthly record of 6.1 bcfd, Refinitiv data showed.