NEW YORK: US natural gas futures were little changed on Thursday after erasing a 5% decline earlier in the session, as the market waited for direction from a federal storage report expected to show last week’s build was near normal due to moderate weather.
A drop in feed gas to liquefied natural gas (LNG) export plants and a 3% decline in oil futures earlier on Thursday pressured US gas futures earlier in the session.
But a jump in European gas futures provided US prices with some support. European prices soared by as much as 22% on Thursday after Russian gas flows declined following the shutdown of a pipe in Ukraine and worries that Russian sanctions on some European energy firms could lead to further gas supply disruptions.
Analysts forecast US utilities added 79 billion cubic feet (bcf) of gas to storage during the week ended May 6. That compares with an increase of 70 bcf in the same week last year and a five-year (2017-2021) average increase of 82 bcf.
If correct, last week’s increase would boost stockpiles to 1.646 trillion cubic feet (tcf), or 15.8% below the five-year average of 1.955 tcf for this time of the year.
US front-month gas futures for June delivery were down 1.7 cents, or 0.2%, to $7.623 per million British thermal units (mmBtu) at 10:05 a.m. EDT (1405 GMT).
Despite recent declines, US gas futures are still up about 104% so far this year as higher global prices have kept demand for US LNG exports strong since Russia’s Feb. 24 invasion of Ukraine. Gas was trading around $32 per mmBtu in Europe and $23 in Asia. The US contract rose to a 13-year high near $9 on May 6.
The US gas market remains mostly shielded from those higher global prices because the United States is the world’s top gas producer, with all the fuel it needs for domestic use while capacity constraints inhibit exports of more LNG no matter how high global prices rise.
Data provider Refinitiv said average gas output in the US Lower 48 states has climbed to 94.7 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021.
Refinitiv projected average US gas demand, including exports, would slide from 90.5 bcfd this week to 89.5 bcfd next week. The forecast for next week was lower than Refinitiv’s outlook on Wednesday due to the decline in LNG feedgas.
On a daily basis, feed gas to US LNG plants was on track to drop to near a four-week low of 11.7 bcfd due mostly to a decline at Cheniere Energy Inc’s Corpus Christi plant in Texas.
Since the United States will not be able to produce much more LNG anytime soon, it has worked with allies to divert LNG exports from elsewhere to Europe to help European Union (EU) countries and others break their dependence on Russian gas.
Russia exported about 8.5 bcfd of gas to Europe on Wednesday on the three mainlines into Germany North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route - down from 9.0 bcfd on Tuesday and an average of around 11.9 bcfd in May 2021.
Gas stockpiles in Northwest Europe - Belgium, France, Germany and the Netherlands - were about 16% below the five-year (2017-2021) average for this time of year, down from 39% below the five-year norm in mid-March, according to Refinitiv. Storage was currently about 34% of full capacity.
US inventories, meanwhile, were also around 16% below their five-year norm.