US natgas prices fall 3% to 5-month low on mild weather ahead of storage report

By Scott DiSavino

April 24 (Reuters) - U.S. natural gas futures fell about 3% to a five-month low on Thursday on expectations that mild weather will keep heating and cooling demand low in coming weeks, allowing energy companies to continue injecting more gas into storage than usual through at least early May.

That price drop came ahead of a federal report expected to show that last week's storage build was slightly bigger than usual due again to mild weather.

Analysts projected utilities added 64 billion cubic feet of gas into storage during the week ended April 18.

U.S. gas stockpiles, meanwhile, were still around 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

Gas futures NGc1 for May delivery on the New York Mercantile Exchange fell 10.0 cents, or 3.3%, to $2.922 per million British thermal units at 9:20 a.m. EDT (1320 GMT), putting the contract on track for its lowest close since November 15.

That price drop kept the front-month in technically oversold territory for a sixth day in a row for the first time since February 2024.

The premium of futures for the second-month June contract over the front-month May contract NGK25-K26, meanwhile, rose to a record 6.3 cents per mmBtu on Thursday, just a few days before June takes over as the new front-month.

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 2.8 bcfd over the past six days to a preliminary two-week low of 105.1 bcfd on Thursday, down from a record 108.0 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 KMI.N 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.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 9.

LSEG forecast average gas demand in the Lower 48, including exports, will hold around 98.6 bcfd this week and next. Those forecasts were similar to LSEG's outlook on Wednesday.

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 VG.N 3.2-bcfd Plaquemines export plant under construction in Louisiana.

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 at a one-week low of around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and at an 11-month low of around $12 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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