U.S. natgas futures steady despite small storage build

U.S. natural gas futures held steady on Thursday


U.S. natural gas futures held steady on Thursday on a small decline in exports even though last week's storage build was slightly smaller than expected and the latest forecasts call for cooler weather and higher heating demand over the next two weeks than previously expected.

The U.S. Energy Information Administration said U.S. utilities added 60 billion cubic feet (bcf) of gas into storage during the week ended April 30.

That was a little lower than the 64-bcf build analysts forecast in a Reuters poll and compares with an increase of 103 bcf in the same week last year and a five-year (2016-2020) average increase of 81 bcf. 

Last week's injection boosted stockpiles to 1.958 trillion cubic feet (tcf), or 3.0% below the five-year average of 2.019 tcf for this time of year.

Front-month gas futures NGc1 remained unchanged at $2.939 per million British thermal units at 10:38 a.m. EDT (1438 GMT).

That kept the contract in overbought territory with a Relative Strength Index (RSI) over 70 for a ninth straight day for the first time since September 2019.

Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 90.7 billion cubic feet per day (bcfd) so far in May, up from 90.6 in April but well below November 2019's monthly record of 95.4 bcfd.

Refinitiv projected average gas demand, including exports, would rise from 87.2 bcfd this week to 87.7 bcfd next week as the weather turns cooler. Those forecasts were higher than Refinitiv estimated on Wednesday.

The amount of gas flowing to U.S. LNG export plants averaged 11.3 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. 

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