U.S. natural gas futures slid about 3% on April 16 to a 10-week low on near-record output and a decline in daily flows to liquefied natural gas export plants.

In addition, analysts said forecasts for mild weather over the next two weeks should allow utilities to keep pushing lots of gas into storage through early May.

U.S. gas stockpiles are around 4% below normal levels for this time of year after cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January. 

Gas futures for May delivery on the New York Mercantile Exchange slid 8.2 cents, or 2.5%, to settle at $3.247/MMBtu, their lowest close since Jan. 31.

That decline also pushed the contract into oversold territory for a second time this month.

Supply and demand 

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.3 Bcf/d so far in April, up from a monthly record of 106.2 Bcf/d in March.

Looking ahead, however, analysts said energy firms could cut back on oil drilling in the coming weeks due to the roughly 14% drop in U.S. crude futures so far in April.

The crude price drop was related in part to uncertainty tied to U.S. President Donald Trump's on-again off-again trade tariffs, which could reduce economic growth and oil demand.

Any reduction in oil drilling in shale basins such as the Permian in Texas and New Mexico and the Bakken in North Dakota could boost gas prices by cutting gas output.

Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 1.

With seasonally milder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 99.7 Bcf/d this week to 96.7 Bcf/d next week. Those forecasts were slightly higher than LSEG's outlook on April 15.

The average amount of gas flowing to the eight big LNG export plants operating in the U.S. climbed from a monthly record of 15.8 Bcf/d in March to 16.2 Bcf/d so far in April on rising flows to Venture Global's 3.2-Bcf/d Plaquemines export plant under construction in Louisiana.

On a daily basis, however, LNG feedgas was on track to hold at a one-week low of 16.1 Bcf/d on April 16, down from an average of 16.7 Bcf/d over the prior seven days, according to LSEG data.

That daily LNG feedgas decline was mostly due to lower expected flows to Cheniere Energy's 3.9-Bcf/d Corpus Christi export plant in service and under construction in Texas to 1.7 Bcf/d on April 16, down from 2.2 Bcf/d on April 15 and an average of 2.3 Bcf/d over the prior seven days. The Corpus Christi plant includes three 0.8-Bcf/d operating trains and seven 0.2-Bcf/d mid-scale trains under construction.

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 at a one-week high of around $12 per MMBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and a 10-month low of around $11 at the Japan Korea Marker (JKM) benchmark in Asia.

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