U.S. natural gas futures fell to a two-week low on Tuesday on forecasts for milder weather and lower heating demand over the next two weeks than previously expected.
Traders also noted prices were down with a small increase in output and a small decline in exports.
Front-month gas futures NGc1 fell 3.5 cents, or 1.2%, to $2.897 per million British thermal units at 8:45 a.m. EDT (1245 GMT), putting the contract on track for its lowest close since April 27.
Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 90.9 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April, but still well below November 2019's monthly record of 95.4 bcfd.
Refinitiv projected average gas demand, including exports, would fall from 87.3 bcfd this week to 82.4 bcfd next week as the weather turns milder. Those forecasts were lower than Refinitiv estimated on Monday.
The amount of gas flowing to U.S. LNG export plants averaged 11.4 bcfd so far in May, down from April's monthly record of 11.5 bcfd.
Buyers around the world continue to purchase near-record amounts of U.S. gas because prices in Europe and Asia remain high enough to justify the cost of buying and transporting the U.S. fuel across the ocean.
Traders, however, said U.S. LNG exports cannot rise much more until new units enter service in late 2021/early 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants pull in a little more gas than they export because some of the fuel is used to run the facility.
U.S. pipeline exports to Mexico averaged 5.9 bcfd so far in May, down from April's monthly record of 6.1 bcfd, Refinitiv data showed.
(Reporting by Scott DiSavino; editing by Emelia Sithole-Matarise) ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))
