(Reuters) – U.S. natural gas futures dropped about 7% to a five-month low on Monday on record output and forecasts for milder weather and lower demand over the next two weeks than previously expected.
Gas futures for May delivery on the New York Mercantile Exchange fell 22.9 cents, or 7.1%, to settle at $3.016 per million British thermal units, their lowest close since November 19.
That kept the front-month in technically oversold territory for a third day in a row for the first time since October 2024.
Analysts noted mild weather should allow utilities to keep injecting lots of gas into storage through early May.
U.S. 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.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.6 billion cubic feet per day in April, up from a monthly record of 106.2 bcfd in March.
On a daily basis, output rose to a record 108.0 bcfd on April 18, up from 106.6 bcfd on April 17 and an average of 106.7 bcfd over the prior seven days. That topped the prior all-time daily high of 107.5 bcfd on April 12.
Looking ahead, however, analysts noted energy firms could start cutting back on oil drilling in the coming weeks due to the roughly 11% drop in U.S. crude futures so far in April.
The crude price drop was related in part to uncertainty tied to U.S. President Donald Trump’s on-again off-again trade tariffs, which could reduce global economic growth and energy demand.
Any reduction in oil drilling in shale basins such as the Permian in Texas and New Mexico and the Bakken in North Dakota could boost gas prices by cutting gas output.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 6.
LSEG forecast average gas demand in the Lower 48, including exports, will hold around 98.1 bcfd this week and next. The forecast for this week was lower than LSEG’s outlook on Thursday before the long Good Friday holiday weekend.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. climbed from a monthly record of 15.8 bcfd in March to 16.1 bcfd so far in April on rising flows to Venture Global’s 3.2-bcfd Plaquemines export plant under construction in Louisiana.
U.S. LNG feedgas was still on track to hit a new record in April despite the brief shutdown of a liquefaction train at Freeport LNG’s 2.1-bcfd export plant in Texas on April 17 and an expected reduction in flows to Cheniere Energy’s 4.5-bcfd Sabine plant in Louisiana, according to LSEG data.
Flows to Sabine were on track to fall to a two-week low of 4.0 bcfd on Monday, down from 4.4 bcfd on Sunday and an average of 4.6 bcfd over the prior seven days.
Flows to Freeport remained around 2.1 bcfd from April 18-21 after falling to 1.6 bcfd on April 16 when liquefaction Train 1 at the plant shut due to an issue with a compressor system, according to a company filing with state environmental regulators and LSEG data.
Reporting by Scott DiSavino, editing by Deepa Babington and Marguerita Choy
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