U.S. Natural Gas Prices Surge 5% Ahead of Contract Expiration
(Reuters) — U.S. natural gas futures jumped about 5% to a one-week high on Monday in light trade ahead of the expiration of the front-month contract on forecasts for higher demand this week than previously expected.
Earlier in the day, prices slid about 2% to a five-month low on rising output and forecasts for mild weather through mid-May that will limit heating and cooling demand, allowing utilities to keep putting more gas than usual into storage.
On its last day as the front month, gas futures for May delivery on the New York Mercantile Exchange were up 15.1 cents, or 5.1%, at $3.09 per million British thermal units at 10:06 a.m. EDT (1406 GMT).
Despite the price jump, the front-month remained in technically oversold territory for an eighth day in a row for the first time since February 2024.
The June contract, which will soon be the front month, jumped about 6.5% to $3.31 per MMBtu.
One factor pressuring prices in recent weeks has been fast growth in the amount of gas in storage. After falling below normal levels in mid-January, analysts project gas inventories will rise above the five-year average in the next week or two.
After cold weather in January and February boosted demand for gas, the total amount in storage was about 1% below normal for this time of year.
With gas futures down about 33% over the past seven weeks, speculators cut their net long futures and options positions on the New York Mercantile and Intercontinental exchanges for a seventh week in a row to their lowest since January, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report.
Supply and Demand
Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 106.5 billion cubic feet per day in April from a monthly record of 106.2 Bcf/d in March.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 13.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 99.2 Bcf/d this week to 97.4 Bcf/d next week. The forecast for this week was higher than LSEG's outlook on Friday, while its forecast for next week was lower.
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 Bcf/d in March to 16.0 Bcf/d so far in April on rising flows to Venture Global's 3.2-Bcf/d 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 near a nine-month low of around $11 per MMBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and at an 11-month low of around $11 at the Japan Korea Marker (JKM) benchmark in Asia.
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