TMN - Natural gas

Natural Gas Prices Dropped amid Lower Demand

On Wednesday, natural gas settled lower due to milder weather and weaker heating demand over the following two weeks.

Natural gas futures for June delivery declined by -1.35% to $2.40 per metric million British thermal units on April 26.

Even though the US liquefied natural gas (LNG) export plans were on track, prices still dropped. The plants planned to hit a record high in April, marking its second month. It came after the Freeport LNG’s shipment in Texas exited an eight-month outage during February. 

Discontinuations of the commodity from underground inventory facilities in the US during 2022/23 were the lowest. According to analysts, these levels were not seen since the 2015/16 season.

Based on the Energy Information Administration’s (EIA) statement, more robust growth in production and less space heating affected costs. They added that it is responsible for less withdrawal despite more utilization in electric generation.

Also, the EIA mentioned that natural gas cancellations from storage facilities came at 1,707.00 billion cubic feet (bcf). It occurred during the 2022/23 heating season after minimizing occasional injections.

Moreover, a data provider reported that average gas flows in seven major US LNG export plants rose. The increase is 14.10 billion cupid feet per day (bcfd) in April. It is higher than the record of 13.20 bcfd in March.

Weather Forecast Dragged Down Natural Gas Prices

Inconsistent weather forecasts caused mixed demand signals. As a result, supply and demand issues kept natural gas prices volatile.

Furthermore, US LNG exporters have concerns about the weak prices in Europe and Asia. The low gas costs erased short-covering gains from yesterday.

As the warmer weather approaches, analysts anticipate a plunge in natural gas demand in the US. This includes shipments from 99.80 bcfd this week to 94.50 bcfd next week.

In April, export plants feared that low gas prices in Europe and Asia would cause US LNG deliverers to cancel cargoes.

This was observed in 2020 when weak demand and oversupply led to the cancellation of around 175 LNG shipments.

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