NEW YORK: US natural gas futures fell around 1% on Wednesday on a smaller than previously expected decline in daily output so far this month after a 10%-price jump on Tuesday forced some traders to cover some short positions.
Gas futures for June delivery on the New York Mercantile Exchange fell 2.4 cents, or 0.7%, to $3.403 per million British thermal units at 9:07 a.m. EDT (1307 GMT).
Analysts said heating and cooling demand should remain low across much of the country in coming weeks, allowing utilities to keep adding more gas into storage than normal for this time of year.
Gas stockpiles were already around 3% above the five-year (2020-2024) average.
Financial firm LSEG said average gas output in the Lower 48 US states fell to 104.9 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.
On a daily basis, however, output was on track to slide to a preliminary two-week low of 103.9 bcfd on Wednesday, down from 105.0 bcfd on Tuesday and an average of 105.2 bcfd during the prior seven days. That daily output decline was smaller than LSEG’s outlook on Tuesday. Analysts noted preliminary data is often revised later in the day.
Energy traders noted those output reductions were due in part to maintenance on some gas pipes, including US energy firm Kinder Morgan’s 2.7-bcfd Permian Highway from the Permian Basin in West Texas to the Texas Gulf Coast.
Kinder Morgan said it will perform a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.
Meteorologists projected the weather would remain mostly warmer than normal through June 6. LSEG forecast average gas demand in the Lower 48, including exports, will drop from 99.4 bcfd this week to 94.9 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Tuesday.
The average amount of gas flowing to the eight big liquefied natural gas 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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