US natgas prices climb 2pc on near record flows to LNG export plants

NEW YORK: US natural gas futures climbed about 2% on Tuesday on near record flows to liquefied natural gas (LNG) export plants and forecasts for more demand over the next two weeks than previously expected.

Gas futures for May delivery on the New York Mercantile Exchange rose 6.2 cents, or 2.1%, to $3.078 per million British thermal units at 8:52 a.m. EDT (1252 GMT). On Monday, the contract closed at its lowest since November 19.

Despite the price increase, the front-month remained in technically oversold territory for a fourth day in a row for the first time since October 2024.

Analysts noted mild weather expected through early may should allow utilities to keep injecting lots of gas into storage.

US gas stockpiles were currently around 7% 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 106.5 billion cubic feet per day in April, up from a monthly record of 106.2 bcfd in March.

On a daily basis, however, output was on track to fall by around 2.0 bcfd over the past four days to a preliminary one-week low of 105.0 bcfd on Tuesday, down from a record 108.0 bcfd on April 18. Traders noted preliminary data is often revised later in the day.

Part of the reason for that output reduction was maintenance on US energy firm Kinder Morgan’s 2.7-bcfd Permian Highway gas pipe from the Permian basin in West Texas to the Texas Gulf Coast. Kinder Morgan has said it will be performing a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.

Traders noted the Permian Highway reduction was also part of the reason why spot gas prices at the Waha Hub slid to a three-week low of around 73 cents per mmBtu for Tuesday, down from 97 cents for Monday and an average of $1.64 over the prior seven days.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 7.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 98.2 bcfd this week to 98.8 bcfd next week. Those forecasts were higher than LSEG’s outlook on Monday.