U.S. natural gas futures fell about 2% to a five-month low on Friday on forecasts for mild weather through mid May that will keep heating and cooling demand low, allowing utilities to keep putting more gas into storage than usual in coming weeks.
On its second to last day as the front-month, gas futures for May delivery on the New York Mercantile Exchange fell 5.6 cents, or 1.9%, to $2.87 per million British thermal units, putting the contract on track for its lowest close since November 14.
That kept the front-month in technically oversold territory for a seventh day in a row for the first time since February 2024.
For the week, the contract was down about 11%, putting it down for a fourth week in a row for the first time since July 2024. That put the contract down about 29% during those four weeks.
One factor pressuring prices in recent weeks has been fast growth in the amount of gas in storage so far this spring. After falling below normal levels in mid January, analysts project gas inventories will rise over the five-year normal in the next week or two.
The total amount of gas in storage was currently about 1% 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 a record draw in January.
Looking ahead, the premium of March 2026 futures over April 2026 (NGH26-J26), which the industry calls the widow maker, fell to their lowest since April 2021, while the premium of the November 2025 contract over October 2025 (NGV25-X25) rose to its highest since February 2024.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.5 billion cubic feet per day in April from a monthly record of 106.2 bcfd in March.
On a daily basis, output was on track to fall by around 3.0 bcfd over the past seven days to a preliminary two-week low of 105.1 bcfd on Thursday, down from a record 108.1 bcfd on April 18. Traders noted preliminary data is often revised later in the day.
Part of the reason for the output reduction was maintenance on U.S. energy firm Kinder Morgan’s 2.7-bcfd Permian Highway gas pipe from the Permian basin in West Texas to the Texas Gulf Coast.
Kinder Morgan has said it will be performing a turbine exchange at the Big Lake compressor station from May 13-26 that will reduce mainline capacity to around 2.2 bcfd.
Traders noted the Permian Highway reduction trapped some gas in the Permian basin, helping to cause spot gas prices at the Waha Hub (NG-WAH-WTX-SNL) in West Texas to average just 32 cents per mmBtu over the past two days, down from an average of $1.44 over the prior seven days.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 10.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 98.6 bcfd this week to 98.2 bcfd next week and 97.8 bcfd in two weeks. The forecasts for next week were lower than LSEG’s outlook on Thursday.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. has climbed from a monthly record of 15.8 bcfd in March to 16.0 bcfd so far in April on rising flows to Venture Global’s 3.2-bcfd Plaquemines export plant, under construction in Louisiana.
Source: Reuters
