US natgas prices drop 7% on reduced flows to LNG export plants, lower demand forecasts

By Scott DiSavino

April 4 (Reuters) - U.S. natural gas futures dropped about 7% to a five-week low on Friday on a decline in daily liquefied natural gas (LNG) exports and forecasts for mild weather and lower demand over the next two weeks than previously expected.

That price drop occurred despite a decline in output so far this month.

Gas futures NGc1 for May delivery on the New York Mercantile Exchange fell 30.1 cents, or 7.3%, to settle at $3.837 per million British thermal units, their lowest since February 28.

For the week, the contract lost about 6% after gaining about 2% last week.

Energy traders said mild weather and low demand last month likely allowed utilities to add gas to storage in March for the first time since 2012 and only the second time in history.

Gas stockpiles, however, were still about 3% 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 fell to 105.7 billion cubic feet per day so far in April, down from a monthly record 106.2 bcfd in March.

Looking forward, analysts noted the 10% drop in U.S. crude CLc1 futures this week could result in less oil drilling in shale basins like the Permian in Texas and New Mexico and Bakken in North Dakota, which could result in lower amounts of gas associated with that oil production.

Oil prices dropped this week on worries U.S. President Donald Trump's tariffs could result in lower global economic growth and oil demand, while the Organization of the Petroleum Exporting Countries (OPEC) and their allies, including Russia, a group known as OPEC+, announced plans to keep boosting oil supplies. O/R

Meteorologists projected temperatures in the Lower 48 states would remain mostly near normal through April 19.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 104.0 bcfd this week to 105.9 bcfd next week before dropping to 97.2 bcfd in two weeks. The forecast for next week was lower than LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big operating U.S. LNG export plants fell to 15.6 bcfd so far in April, down from a monthly record 15.8 bcfd in March.

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 six-month low of $12 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and held near a three-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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