U.S. natgas prices ease 1% to 2-week low on lower demand forecasts

(Reuters) - U.S. natural gas futures eased about 1% to a two-week low on worries about an oversupply of gas in storage and forecasts for lower demand over the next two weeks than previously expected due to a drop in feedgas to the Freeport LNG export plant in Texas (U.S.).

Analysts forecast gas stockpiles were about 36% above normal levels for this time of year. [EIA/GAS][NGAS/POLL]

That price decline occurred despite a continued drop in output as producers keep reducing drilling activities after prices fell to a 3-1/2-year low in February and March, and forecasts for demand for heating to rise in two weeks when the weather is expected to turn cooler.

Front-month gas futures <NGc1> for May delivery on the New York Mercantile Exchange were down 0.8 cents, or 0.5%, to $1.756 per million British thermal units (mmBtu) at 9:15 a.m. EDT (1315 GMT), putting the contract on track for its lowest close since March 27.

The contract closed on Thursday at its lowest price since March 28.

For the week, the front-month was down about 2%, which would be its first weekly decline in four weeks.

In the spot market, next-day gas prices at the Waha hub <NG-WAH-WTX-SNL> in the Permian Basin in West Texas rose to negative $1.74 per mmBtu on April 11 from nearly a four-year low of negative $2.10 on April 10, according to data from SNL Energy on the LSEG terminal.

In Canada, spot gas prices at the AECO hub <NG-ASH-ALB-SNL> in Alberta fell to $1.00 per mmBtu, their lowest level since October 2022 for a fourth day in a row.

In other news, DT Midstream <DTM.N> won a ruling in a Louisiana appeals court that will allow it to build a pipeline across an Energy Transfer pipe in the state.

Several other companies have fought to cross Energy Transfer pipelines in Louisiana over the past year or so, including Williams Cos<WMB.N> and Momentum Midstream.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 98.8 billion cubic feet per day (bcfd) so far in April, down from 100.8 bcfd in March. That compares with a monthly record of 105.6 bcfd in December 2023.

LSEG forecast gas demand in the Lower 48, including exports, would fall from 99.3 bcfd this week to 94.4 bcfd next week as the weather warms before rising to 98.1 bcfd in two weeks with cooler temperatures.

The forecasts for this week and the next were lower than LSEG's outlook on Thursday.

Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants have slid to an average of 12.5 bcfd so far in April, down from 13.1 bcfd in March. That compares with a monthly record of 14.7 bcfd in December.

On a daily basis, LNG feedgas was on track to fall to a one-week low of 12.0 bcfd as the amount of gas flowing to Freeport LNG holds at 0.1 bcfd for a second day in a row on Friday, down from a recent high of 1.1 bcfd on Tuesday and an average of 0.8 bcfd over the prior seven days.

Freeport said in late March that it expects Trains 1 and 2 to remain shut until May for inspections and repairs, while Train 3 was operating.

But the small increase in feedgas seen on Tuesday convinced analysts and traders that Train 1 or 2 was returning to service early. That, however, was before Train 3 tripped late on Tuesday.

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