US natural gas prices climb on lower output, higher demand
NEW YORK: US natural gas futures climbed about 4% on Tuesday on a decline in daily output and forecasts for more demand next week than previously expected.
Gas futures for June delivery on the New York Mercantile Exchange rose 12.1 cents, or 3.9%, to $3.234 per million British thermal units at 8:55 a.m. EDT (1255 GMT). On Monday, the contract closed at its lowest since April 25.
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) normal.
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 May, down from a monthly record of 105.8 bcfd in April.
On a daily basis, output was on track to slide to a preliminary one-week low of 103.4 bcfd on Tuesday, down from 104.7 bcfd on Monday and an average of 104.1 bcfd over the prior seven days. Analysts noted preliminary data is often revised later in the day.
Energy traders noted that part of the reason for output reductions this month was 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.
Traders have noted the Permian Highway and other pipeline work trapped some gas in the Permian Basin, causing spot gas prices at the Waha Hub in West Texas to drop to a negative $1.52 for Monday. Waha prices, however, rose to a positive 46 cents for Tuesday.
LSEG forecast average gas demand in the Lower 48, including exports, will drop from 98.8 bcfd this week to 95.1 bcfd next week. The forecast for next week was higher than LSEG's outlook on Monday.
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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