US natgas prices ease on forecasts for less demand, lower flows to LNG export plants

NEW YORK: US natural gas futures eased about 1% on forecasts for less demand and lower flows to liquefied natural gas (LNG) export plants over the next two weeks than previously expected.

Gas futures for July delivery on the New York Mercantile Exchange fell 4.1 cents, or 1.1%, to $3.653 per million British thermal units. On Monday, the contract closed at its highest since May 9.

Next-day prices at the US Henry Hub benchmark in Louisiana were trading around $3 per mmBtu. Low next-day Henry Hub prices have kept pressure on futures in recent weeks with spot contracts trading below front-month futures every day since late April.

Analysts have said that so long as spot prices remain far enough below front-month futures to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.

Another factor keeping pressure on prices, analysts forecast US gas stockpiles - already about 4% above the five-year (2020-2024) average - rose by more than usual for a seventh week in a row during the week ended May 30.

In Canada, where wildfires were raging across the country, spot gas prices at the AECO hub in Alberta fell to an eight-month low of just 6.3 cents per mmBtu in a sign that gas was trapped in the nation’s biggest gas-producing province.

That compares with average AECO prices of $1.41 per mmBtu so far this year, 96 cents in 2024 and $2.28 over the prior five years (2019-2023).

Financial firm LSEG said average gas output in the Lower 48 US states fell to 104.0 billion cubic feet per day so far in June, down 105.2 bcfd in May and a monthly record high of 106.3 bcfd in March.

On a daily basis, output was on track to drop to a preliminary three-month low of 102.9 bcfd on Tuesday, down from a 104.3 bcfd on Monday and an average of 105.3 bcfd over the prior seven days. Analysts noted preliminary data was often revised later in the day.