US natural gas prices ease

NEW YORK: US natural gas futures eased about 1% to a two-week low on Friday on a smaller decline in output than previously expected, lower gas flows to liquefied natural gas (LNG) export plants and forecasts for less demand in two weeks.

That should translate into extra supplies that will allow utilities to keep injecting more gas into storage than usual for this time of year.

Gas futures for June delivery on the New York Mercantile Exchange fell 1.9 cents, or 0.6%, to settle at $3.343 per million British thermal units, their lowest close since April 30 for a second day in a row.

That put the front-month down about 12% for the week after soaring about 29% over the prior two weeks.

Despite a heat wave in Texas this week, analysts said heating and cooling demand should remain low across much of the rest 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 around 3% above the five-year (2020-2024) normal.

Financial firm LSEG said average gas output in the Lower 48 US states fell to 103.7 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 drop to a preliminary one-week low of 103.1 bcfd on Friday. But that decline was smaller than previously expected. Analysts have noted that preliminary data is often revised later in the day.

Part of the reason for output reductions was spring 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 reduction trapped some gas in the Permian basin, helping spot gas prices at the Waha Hub in West Texas to drop to around 94 cents per mmBtu on Friday, down from $1.58 For Thursday and an average of $1.87 over the prior seven days.