U.S. natgas futures slip to 1-week low on milder weather forecast

U.S. natural gas futures slipped to a one-week low on Monday on forecasts for milder weather and lower heating demand next week 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 fell 3.8 cents, or 1.3%, to $2.920 per million British thermal units at 9:22 a.m. EDT (1322 GMT), putting the contract on track for its lowest close since April 29.

But with cooler weather still expected this week, speculators last week boosted their net long gas futures and options positions on the New York Mercantile and Intercontinental Exchanges to their highest since early March.

Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 91.0 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 88.0 bcfd this week to 82.7 bcfd next week as the weather turns seasonally warmer. That forecast for next week was lower than Refinitiv estimated on Friday.

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 5.8 bcfd so far in May, down from April's monthly record of 6.1 bcfd, Refinitiv data showed.

(Reporting by Scott DiSavino, Editing by Nick Zieminski) ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))