Natural gas ticks lower on slow output forecasts

Natural gas

On Monday, natural gas prices declined as experts forecasted a slow rise in output, milder weather, and a drop in demand in the coming weeks.

Futures tied to the commodity slashed 2.16% or 0.17 to $7.97 per MMBtu. It trailed a plunge of 10.21% to $7.96 per MMBtu last Friday.

Accordingly, American data provider Refinitiv expected the average gas output in the United States to decrease. In the lower 48 states, the company anticipated a drop of 94.30 billion cubic feet per day (bcfd) in May. This projection lowered from the previous 94.50 bcfd in April.

Nevertheless, the current pace of production has increased in recent days compared to a monthly record of 96.10 bcfd last year.

Moreover, Refinitiv expected average American gas demand, including exports, to skid from 90.60 bcfd to 90.40 bcfd next week. Consequently, it anticipated a drop of 89.50 bcfd in two weeks as the weather became milder.

Subsequently, the amount of natural gas flowing to US LNG export plants was 12.30 bcfd this month. It rose from the 12.20 bcfd in April but remains below the monthly record of 12.90 bcfd in March.

The current gas in storage remained low at 1.57 trillion cubic feet. The level is 16.00% below the five-year average for supply.

Meanwhile, the Energy Information Administration said that natural gas production and demand would rise in 2022 as the economy grows.

EIA expected dry gas production to jump to 97.41 billion cubic feet per day (bcfd) this year. Eventually, it estimated 100.86 bcfd in 2023 from a record 93.57 bcfd in 2021. These estimates limited the downsides of natural gas prices.

Australia looks to fill Asia’s natural gas gap

Woodside Petroleum, Australia’s largest exporter of liquefied natural gas, has reported surging demand from Asia. Correspondingly, the production company sent nine additional cargoes to South Korea and Japan, gaining more market share from Russia.

At present, Tokyo is the world’s largest LNG importer and enjoys a longstanding trade partnership with Canberra. Remarkably, Australia is already its largest supplier, accounting for 36.00% of total imports in the country.

Moscow’s invasion of Ukraine has upended global commodity markets, triggering a scramble for resources. Accordingly, the Kremlin deeply suffered from the heavy sanctions imposed by the West.

Nevertheless, Gazprom mentioned it supplied natural gas to Europe through Ukraine on Sunday. The Russian gas producer explained that the move is in line with requests from European consumers.

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