NEW YORK: US natural gas futures fell about 4% on Monday on a rise in output in recent days coupled with a decline in gas flows to liquefied natural gas (LNG) export plants.
That price drop came despite forecasts for more demand this week than previously expected.
Gas futures for June delivery on the New York Mercantile Exchange fell 16.0 cents, or 4.2%, to $3.635 per million British thermal units. On Friday, the contract closed at its highest since April 9.
But, with futures up about 29% over the past two weeks, speculators last week boosted their net long futures and options positions on the New York Mercantile and Intercontinental exchanges for the first time in nine weeks, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.
Analysts said mostly mild weather should keep heating and cooling demand low in coming week, allowing utilities to continue injecting more gas into storage than normal for this time of year.
Gas stockpiles were already about 3% above the five-year (2020-2024) normal.
Financial firm LSEG said average gas output in the Lower 48 US states fell to 103.7 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.
But, on a daily basis, gas output was on track to slip to a preliminary 103.4 bcfd on May 12, down from a one-week high of 104.4 bcfd on May 10 and up from a 10-week low of 102.7 bcfd on May 6. That compares with a daily record high of 107.4 bcfd on April 18.
Analysts have noted that preliminary data is often revised later in the day.
Looking ahead, analysts said the roughly 11% drop in US crude futures so far in 2025 should prompt drillers to cut back on oil production.
Any decline in oil production would ultimately reduce the amount of gas pulled out of the ground that is associated with that oil output. About 37% of US gas production comes from associated gas, according to federal energy data.
Over time, analysts said any reduction in associated gas output should increase gas prices.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 27.
With warmer weather starting to boosting air conditioning use, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 97.0 bcfd this week to 98.2 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Friday.
The average amount of gas flowing to the eight big LNG export plants operating in the US fell to 15.1 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.
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