Gas futures for May delivery on the New York Mercantile Exchange concluded their front-month tenure on a downward trajectory, settling at $1.61 per million British thermal units (mmBtu), marking a 2.4 cents decline or 1.5%. This dip brought prices to their lowest since March 26, contributing to a weekly decline exceeding 7%.
LNG feedgas witnessed a daily figure of 12.1 billion cubic feet per day (bcfd), with the volume of gas flowing to Freeport LNG plummeting to 0.1 bcfd from 0.5 bcfd on Monday. Ongoing outages at Freeport LNG facilities have persisted throughout the year, exacerbating pressure on US natural gas prices and exerting upward momentum on prices in Europe.
Gary Cunningham, director of market research at Tradition Energy, attributed today’s market downturn to the combination of issues with Freeport LNG facilities and adverse weather conditions.
Despite the challenges, a glimmer of hope emerged as the first tanker set sail from Freeport LNG’s Texas export terminal on Tuesday, fueling optimism for a potential resumption of gas processing following an earlier outage this month.
The US Energy Information Administration (EIA) reported that utilities injected 92 billion cubic feet (bcf) of gas into storage during the week ending April 19, surpassing traders’ expectations. Traders surveyed by Reuters anticipated an increase of 82 bcf in weekly natural gas stocks.
Cunningham emphasized the prevailing supply-heavy balance between supply and demand, underscoring the likelihood of continued price depression in the market.
Forecasting firm LSEG anticipates a decline in gas demand in the Lower 48 states, including exports, with projected figures falling to 91.7 bcfd next week from 92.2 bcfd this week.
Observing market dynamics, energy advisory Ritterbusch and Associates highlighted the expansion in the expiring May-June gas spread, indicative of an oversupplied market scenario. With supplies more than adequate to meet the demands of a warmer-than-normal summer, utilities exhibit little inclination to stand for delivery.
LSEG further reported a decline in gas output in the Lower 48 US states, averaging 96.9 bcfd in April compared to 100.8 bcfd in March. This downward trend contrasts with a monthly record high of 105.6 bcfd recorded in December 2023.
