US Natural Gas Futures Retreat 2.4%, Mild Weather and Lower LNG Flows Weigh on Demand

Key Moments:

Soft Demand and LNG Slowdown Drag Prices Lower

On Thursday, US natural gas futures experienced a 2.4% decline as production levels saw only minor reductions and demand from liquefied natural gas export facilities eased. Traders were also preparing for a government storage report expected to show a gas inventory build beyond typical seasonal levels, as unseasonably mild temperatures depressed energy demand.

Storage Build Expected to Outpace Historical Norms

According to analyst forecasts, utilities injected 115 billion cubic feet (cf) of gas into underground storage last week. That would mark a significantly larger increase than the 78 bcf added during the same week in 2024. Current inventories are estimated to be around 4% higher than the average for the years 2020 through 2024.

LNG Feed Gas Levels Drop, Production Slips Slightly

According to data from LSEG, average gas production from the Lower 48 US states so far in May reached 104.9 billion cubic feet per day (bcfd), a modest decline from the monthly record 105.8 bcfd set in April.

Some of the production dip was attributed to ongoing maintenance projects, such as efforts by Kinder Morgan’s work on its 2.7-bcfd Permian Highway pipeline. The company also reported it would perform a turbine exchange at the Big Lake compressor station from May 13th to May 26th. This will cut capacity to approximately 2.2 bcfd.

In April, the average volume of natural gas delivered to the eight major US LNG export facilities reached an all-time monthly high of 16.0 bcfd. However, this month has recorded a figure of 15.1 bcfd. This decline was also attributed to temporary maintenance and operational cutbacks at several sites.