Key Takeaways:
U.S. natural gas futures slipped for a second session Tuesday as LNG export feedgas flows dropped to a four-month low and mild spring weather kept cooling demand below seasonal norms.
U.S. natural gas futures edged lower Wednesday as the market awaited a recovery in LNG feedgas flows after spring maintenance, with warmer weather expected to lift power-sector demand into next week.
"Traders are watching the 50-day moving average at $3.133 as the key support level — a break below that opens the door to $2.978," said James Hyerczyk, a technical analyst and author of two books on market analysis. "The weather forecast through June 10 is bearish for demand, and production is at record levels."
Front-month July gas futures on the New York Mercantile Exchange settled at $3.167 per million British thermal units Tuesday, down 1.2 cents, after touching the lowest level since late May. Daily LNG feedgas flows fell to 15.7 billion cubic feet per day, a four-month low, as maintenance at ExxonMobil and QatarEnergy's Golden Pass facility, Freeport LNG's Texas plant, and Cheniere's Sabine Pass facility curbed intake, LSEG data show. Average gas output in the Lower 48 states dropped to 108.8 bcfd so far in June from 109.7 bcfd in May, though the Energy Information Administration recently raised its 2026 production forecast to 110.61 bcfd.
The supply cushion heading into summer remains comfortable — storage stood at 2,583 billion cubic feet as of May 29, about 5.9% above the five-year average, according to the EIA. Meteorologists forecast warmer-than-normal weather through June 17, which should boost gas demand from power generators, which account for about 40% of U.S. electricity consumption. LSEG projects average demand will rise from 98.2 bcfd this week to 101 bcfd next week. If the heat materializes as forecast, the inventory surplus could narrow further, but sustained above-normal temperatures across major population centers are needed to shift the supply-demand balance meaningfully.
U.S. LNG exports fell to 10.2 million metric tons in May, the lowest level this year excluding February's shorter month, as seasonal maintenance curbed output, LSEG data show. Cheniere Energy and other exporters had postponed maintenance in March to maximize shipments to Asia amid supply disruptions linked to reduced Qatari supplies, which resulted in a loss of almost 20% of global volumes. At Freeport LNG, one of three liquefaction trains went offline for scheduled maintenance beginning in mid-May, while Cameron LNG reduced feedgas demand for annual maintenance on Train 2.
Despite the overall decline, shipments to Asia rose to a one-year high of 3.68 million tons, or just under 36% of total volumes, up from 2.71 million tons in April. The increase reflected a pricing arbitrage, with the Asian JKM benchmark averaging $17.75 per million British thermal units, holding at roughly a 10% premium to Europe's TTF at $16.11. Europe remained the largest destination, taking 5.13 million tons, or just over 50% of shipments, though that was down from 56% in April.
The injection of 92 billion cubic feet for the week ended May 29 came in below the five-year average of 101 bcf and below the prior year's 119 bcf, EIA data show. The smaller build helped reduce the storage surplus to 5.9% above normal from 6.2% the previous week. Analysts noted that recent output declines likely contributed to the narrowing surplus, though production remains near record levels. The Permian Basin continues to add associated gas alongside crude oil drilling, creating a supply floor that limits upside price moves absent a sustained demand catalyst.
This article is for informational purposes only and does not constitute investment advice.
