US natural gas futures resume slide on high stocks, sluggish demand

Quantum Commodity Intelligence – US natural gas prices were again under downwards pressure the week ending 26 April amid ample slide, sluggish demand and reduced volumes of LNG exports, while production remains at elevated levels despite recent cuts.

The May24 Henry Hub contract on NYMEX was trading at $1.55/mmBtu early Friday (930 am eastern) , hovering just above recent multi-year lows and over 10% down on the week.

At the start of the session the May24 contract traded down to a low of $1.48/mmBtu, but quickly bounced. 

The Jun24 contract registered more modest falls of around 3% to $1.93/mmBtu, but sliding below the key psychological support level of $2/mmBtu.

Prices came under renewed pressure after EIA figures showed a much larger-than-expected injection into the storage of 92 billion cubic feet (Bcf) the week ending 19 April.

That compares with the five-year (2019–2023) average net injections of 59 Bcf and last year's net injections of 77 Bcf during the same week.

Working natural gas stocks totaled 2,425 Bcf, which is 655 Bcf (37%) above the five-year average and 439 Bcf (22%) more than last year at this time, added the EIA.

Exports

LNG shipments from the also US remain subdued, reported the EIA, with 22 LNG vessels leaving the US in the period 18-24 April.

This included nine from Sabine Pass, four from Corpus Christi, three from Cameron, two each from Calcasieu Pass and Elba Island; and one each from Cove Point and Freeport.

Analysts cited the troubled Freeport terminal as one of the primary reasons for the slump in dry gas prices, as the regasification terminal continues to run at a fraction of its capacity amid ongoing technical issues and problems with feed gas supplies.

"The supply glut is real and one of the big problems we continue to have with the natural gas market is Freeport LNG. We need to move as much gas as we can and it does not help when Freeport is down," said Phil Flynn of The Price Futures Group.

Markets also largely shrugged off this week's announcement from natural gas giant EQT that it will extend current production cuts until at least the end of May, but also flagged the likelihood of a further extension as it battles against persistently low spot prices.

Company executives said on a call to analysts that its Q2 production outlook and per unit metrics are based on expectations that the company will maintain the current 1 Bcf/day of gas production cuts, primarily from the Appalachian Basin.