NEW YORK: US natural gas futures held near a three-week high on Wednesday as lower output offset forecasts for weaker demand over the next two weeks than previously expected.
Energy traders noted much of the demand decline came from lower gas flows to liquefied natural gas export plants for planned maintenance.
Gas futures for July delivery on the New York Mercantile Exchange fell 0.6 cents, or 0.2%, to $3.716 per million British thermal units. On Tuesday, the contract closed at its highest level since May 9 for a second day in a row.
In Canada, spot gas prices at the AECO hub in Alberta have traded near an eight-month low this week (6 cents per mmBtu on Tuesday and 10 cents on Wednesday) in a sign that wildfires had reduced demand in Alberta and trapped some of the fuel in the nation’s biggest gas-producing province.
That compares with average AECO prices of $1.41 per mmBtu 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 103.9 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 103 bcfd on Wednesday, down from 103.4 bcfd on Tuesday and an average of 105.3 bcfd over the prior seven days. The decline on Tuesday was less than previously forecast. Analysts noted preliminary data was often revised later in the day.
Gas exports from Canada to the US, meanwhile, were on track to rise to 8.8 bcfd on Wednesday, up from 8 bcfd on Tuesday and 7.9 bcfd on Monday. That compares with a recent high of 9.1 bcfd on May 22 and May 23 and an average of 8.6 bcfd over the past two weeks (May 21-June 4), according to LSEG data.
Gas exports from Canada to the US were around 8.2 bcfd in June 2024 and averaged 7.3 bcfd during the month over the past five years (2020-2024). They set a June record high of 9.7 bcfd in 2022.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 94.8 bcfd this week to 97.1 bcfd next week. Those forecasts were lower than LSEG’s outlook on Tuesday.
The average amount of gas flowing to the eight big US LNG export plants fell to 13.5 bcfd so far in June, down from 15 bcfd in May and a monthly record high of 16 bcfd in April.
Energy traders said LNG feedgas reductions over the past month or so were primarily due to normal spring maintenance, including work at Cheniere Energy’s plants.
Gas flows to Cheniere’s 4.5-bcfd Sabine Pass facility in Louisiana have held at a 23-month low of around 3 bcfd since May 31, down from an average of 4.5 bcfd during May, while feedgas to the company’s 3.9-bcfd Corpus Christi plant in Texas have held at a two-week low of 1.5 bcfd on Tuesday and Wednesday, down from an average of 2 bcfd in May.
Analysts have noted that gas flows to Sabine would likely remain reduced for about three weeks of maintenance from around May 331-June 22.
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