US natgas futures slip to 3-week low on big storage build

US natural gas futures slipped to a three-week low on Thursday on a bigger-than-expected weekly storage build, a gradual increase in output and a small decline in exports.

The US Energy Information Administration (EIA) said US utilities added 71 billion cubic feet (bcf) of gas into storage during the week ended May 14.

That was more than the 60-bcf analysts forecast in a Reuters poll and compares with an increase of 84 bcf in the same week last year and a five-year (2016-2020) average increase of 86 bcf.

That injection boosted stockpiles to 2.100 trillion cubic feet (tcf), or 4.0% below the five-year average of 2.187 tcf for this time of year.

Front-month gas futures fell 5.3 cents, or 1.8%, to $2.911 per million British thermal units at 10:35 a.m. EDT (1435 GMT), putting the contract on track for its lowest close since April 29.

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. That is still well below November 2019's monthly record of 95.4 bcfd.

With the summer air conditioning season approaching, Refinitiv projected average gas demand, including exports, would rise from 81.0 bcfd this week to 84.8 bcfd next week. The forecast for next week was higher than Refinitiv projected on Tuesday due to expectations of higher exports.

The amount of gas flowing to US LNG export plants averaged 10.9 bcfd so far in May, down from April's monthly record of 11.5 bcfd. The decline was due to short-term issues and normal spring maintenance at a few Gulf Coast plants and the gas pipelines that supply them.

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