US natgas prices slide 2% on lower flows to LNG export plants ahead of storage report

By Scott DiSavino

May 22 (Reuters) - U.S. natural gas futures slid about 2% on Thursday on a smaller-than-expected decline in output in recent days and a decline in gas flows to liquefied natural gas (LNG) export plants so far this month.

That price decline came ahead of a federal report expected to show energy firms added more gas to storage last week than usual as mild weather kept both heating and cooling demand lower than normal for this time of year.

Gas futures NGc1 for June delivery on the New York Mercantile Exchange fell 6.7 cents, or 2.0%, to $3.301 per million British thermal units at 9:00 a.m. EDT (1300 GMT).

Analysts projected utilities added 115 billion cubic feet (bcf) of gas into storage during the week ended May 16.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 104.9 billion cubic feet per day so far in May, down from a monthly record high of 105.8 bcfd in April.

On a daily basis, output was on track to slide a little further to a preliminary one-week low of 104.4 bcfd on Thursday, down from 105.0 bcfd on Wednesday and an average of 105.3 bcfd during the prior seven days. That daily output decline was smaller than LSEG's outlook on Wednesday. Analysts noted preliminary data is often revised later in the day.

Energy traders noted those output reductions were due in part to maintenance on some gas pipes, including U.S. energy firm Kinder Morgan's KMI.N 2.7-bcfd Permian Highway from the Permian Basin in West Texas to the Texas Gulf Coast.

Kinder Morgan said it will perform 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 the weather would remain mostly warmer than normal through June 6.

LSEG forecast average gas demand in the Lower 48, including exports, will drop from 100.0 bcfd this week to 96.1 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.

The average amount of gas flowing to the eight big LNG export plants operating in the U.S. fell to 15.1 bcfd so far in May, down from a monthly record of 16.0 bcfd in April.

The LNG feedgas decline so far this month was mostly due to maintenance reductions at Cameron LNG's 2.0-bcfd plant in Louisiana and Cheniere Energy's LNG.N 3.9-bcfd Corpus Christi plant under construction and in operation in Texas, and brief unplanned reductions at Freeport LNG's 2.1-bcfd plant in Texas.

Looking ahead, energy traders said they expect LNG feedgas to remain below April's record high in June with Cheniere planning to conduct about three weeks of maintenance on a couple of liquefaction trains at its 4.5-bcfd Sabine Pass export plant in Louisiana from around June 2-23.

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 around $12 per mmBtu at both the Dutch Title Transfer Facility TRNLTTFMc1 benchmark in Europe and the Japan Korea Marker JKMc1 benchmark in Asia. NG/EU

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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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