U.S. natural gas futures fall as production rises and demand falls – Markets

NEW YORK: U.S. natural gas futures fell about 5% to a one-week low on Friday on higher production and expectations of weaker demand over the past few months. next two weeks than planned.

The decline came even as US power producers were forced to burn more gas for a second straight week this week due to lower wind power. Wind was on track to generate just 11% of the nation’s electricity this week, down from a recent high of 16%, while gas will generate around 36%, down from a recent low of 33%, the data showed. federal.

After building smaller-than-usual storage last week, marketers noted that the extra gas burned by power generators will limit what utilities can pump into storage again this week.

On the first day of the first month, gas futures for July delivery fell 48.1 cents, or 5.4%, to $8.414 per million British thermal units at 9:13 a.m. EDT (1 p.m. 13 GMT), putting the contract on track for its lowest close since May 20.

While June was still the first month, it closed at its highest level since August 2008 on Tuesday and Wednesday.

For the week, the contract was up around 4% after rising around 5% last week.

U.S. gas futures are up around 125% so far this year as much higher prices in Europe and Asia keep demand for U.S. liquefied natural gas (LNG) exports strong, especially since the invasion of Ukraine by Russia on February 24. Europe.

Even with much bigger supply issues in Europe, traders noted that US futures have risen around 16% over the past month, while European prices have fallen around 20%, the Russia continuing to send pipeline supplies and LNG ships continuing to deliver cargo.

Gas was currently trading around $27 per mmBtu in Europe and $22 in Asia. Gas stocks in northwestern Europe were only about 10% below the five-year norm, compared to about 15% below in the United States.

U.S. futures, however, continue to lag far behind world prices, as the U.S. is the world’s largest producer with all the gas it needs for domestic use, while capacity constraints hamper additional LNG exports.

Data provider Refinitiv said average gas production in the lower 48 U.S. states soared to 95.0 billion cubic feet per day (bcfd) so far in May, from 94.5 bcfd in April, from the monthly record of 96.1 bcfd in November 2021.

Refinitiv forecast average U.S. gas demand, including exports, to remain around 88.5 billion cubic feet per day through mid-June. The forecast for this week and next was lower than Refinitiv’s forecast on Thursday.

The average amount of gas delivered to LNG export plants in the United States rose to 12.5 billion cubic feet per day so far in May, from 12.2 billion cubic feet per day in April. It reached a monthly high of 12.9 bcfd in March. The United States can transform about 13.2 billion cubic feet per day of gas into LNG.

Since the United States will not be able to produce much more LNG soon, it has worked with allies to divert exports from elsewhere to Europe to help European Union countries and d others to break their dependence on Russian gas after Russia invaded Ukraine.

Russia exported about 7.4 billion cubic feet per day of gas to Europe on Thursday, as on Wednesday, on the three main lines to Germany: North Stream 1 (Russia-Germany), Yamal (Russia-Belarus- Poland-Germany) and Russia-Ukraine-Slovakia. -Czech Republic-Germany line. This compares to an average of 11.9 bcfd in May 2021.