NEW YORK: US natural gas futures slid 2% to a 10-week low on near-record output and a decline in daily flows to liquefied natural gas export plants.
Gas futures for May delivery on the New York Mercantile Exchange slid 5.6 cents, or 1.7%, to $3.273 per million British thermal units at 9:10 a.m. EDT (1310 GMT), putting the contract on track for its lowest close since February 4.
That decline pushed the contract into oversold territory for a second time this month.
US gas stockpiles were currently around 4% below normal levels for this time of year after cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January.
Financial firm LSEG said average gas output in the Lower 48 US states rose to 106.3 billion cubic feet per day so far in April, up from a monthly record of 106.2 bcfd in March.
Looking ahead, however, analysts said energy firms could cut back on oil drilling in the coming weeks due to the roughly 14% drop in US crude futures so far in April.
The crude price drop was related in part to uncertainty tied to US President Donald Trump’s on-again off-again trade tariffs, which could reduce economic growth and oil demand.
Any reduction in oil drilling in shale basins such as the Permian in Texas and New Mexico and the Bakken in North Dakota could boost gas prices by cutting gas output.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 1.
With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 99.7 bcfd this week to 96.7 bcfd next week. Those forecasts were slightly higher than LSEG’s outlook on Tuesday.
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