US natgas prices slide 2% to 10-week low on rising output, lower demand

By Scott DiSavino

April 15 (Reuters) - U.S. natural gas futures slid about 2% to a 10-week low on Tuesday on near-record output, a decline in daily flows to liquefied natural gas (LNG) export plants and forecasts for less demand over the next two weeks than previously expected.

Gas futures NGc1 for May delivery on the New York Mercantile Exchange fell 5.2 cents, or 1.6%, to $3.273 per million British thermal units, putting the contract on track for its lowest close since February 4.

U.S. electricity generation from gas-fired power plants fell to a near three-year low on Sunday as mild spring weather kept demand for both heating and cooling low and as renewable sources of energy produced more power.

U.S. gas stockpiles, meanwhile, were currently around 4% 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. EIA/GAS NGAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.3 billion cubic feet per day so far in April, up from a monthly record of 106.2 bcfd in March.

Looking forward, however, analysts said energy firms could cut back on oil drilling in coming weeks due to the roughly 14% drop in U.S. crude CLc1 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 economic growth and oil demand. O/R

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 associated with that production.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through April 30.

With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 99.4 bcfd this week to 96.2 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.

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 16.2 bcfd so far in April on rising flows to Venture Global's VG.N 3.2-bcfd Plaquemines export plant under construction in Louisiana.

On a daily basis, however, LNG feedgas was on track to slide to a one-week low of 15.7 bcfd on Tuesday, down from 16.3 bcfd on Monday and an average of 16.8 bcfd over the prior seven days, according to LSEG data.

That daily decline in LNG feedgas was mostly due to an expected decline in flows to Cheniere Energy's LNG.N 4.5-bcfd Sabine Pass export plant in Louisiana to 4.0 bcfd on Tuesday, down from 4.6 bcfd on Monday and an average of 4.9 bcfd over the prior seven days.

Traders noted that LNG production at Sabine was expected to decline this spring due to planned maintenance.

The U.S. became the world's biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.

Gas was trading around a one-week high of $12 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe but at an eight-month low of around $13 at the Japan Korea Marker (JKM) JKMc1 benchmark in Asia. NG/EU

For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal

For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

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