U.S. natgas prices slide 2% on rising output despite summer heat

U.S. natural gas futures slid about 2% on Thursday as producers slowly increase output as power generators burn more gas to meet rising air conditioning use.

That price decline came despite forecasts for hotter weather and higher demand over the next two weeks than previously expected.

Front-month gas futures for July delivery on the New York Mercantile Exchange fell 6.9 cents, or 2.4%, to $2.840 per MMBtu.

Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.2 Bft3d so far in June, up from a 25-month low of 98.1 Bft3d in May. That compares with a monthly record high of 105.5 Bft3d in December 2023.

Analysts said the production increase so far in June was a sign drillers were slowly boosting output after a 47% jump in futures prices in April and May. Prices were also up about 10% so far in June. On a daily basis, output hit a 10-week high of 99.6 Bft3d on June 17.

U.S. energy company EQT, the nation's biggest gas producer, said earlier in June that it started boosting output.

Overall, however, U.S. gas production was still down around 8% so far in 2024 after several energy firms, including EQT and Chesapeake Energy, delayed well completions and cut drilling activities when prices fell in February and March.

Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 5.

LSEG forecast that heat would boost the amount of gas power generators in the Lower 48 burn to keep air conditioners humming, including exports, from 97.8 Bft3d this week to 103.8 Bft3d next week. Those forecasts were higher than LSEG's outlook on Tuesday before the U.S. Juneteenth holiday on Wednesday.

Gas flows to the seven big U.S. LNG export plants rose to 13.0 Bft3d so far in June, up from 12.9 Bft3d in May.

But that remains well below the monthly record high of 14.7 Bft3d in December 2023 due to ongoing plant and pipeline maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy's Sabine Pass and Venture Global's Calcasieu Pass.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine.

Gas was trading at $11 per MMBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and a six-month high of $13 at the Japan Korea Marker (JKM) benchmark in Asia.


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