US natural gas futures fell in after-hours trade on Wednesday on rising domestic supply, while broader energy markets tracked lower on reports that Iran is reviewing a US-backed peace proposal that could ease tensions in the Strait of Hormuz and restore shipping flows through the key chokepoint.
The front-month Henry Hub contract and the continuous benchmark both declined 2.37% to $2.722 per million British thermal units.
LNG feedgas flows to US export terminals dropped 7.8% on the week to 17.7 billion cubic feet per day, the lowest level in more than three months due to seasonal maintenance, Barchart said, citing BNEF data.
The LNG slowdown is leaving more gas in the domestic market and reinforcing concerns about inventory builds. Storage levels were already 7.7% above the five-year average as of April 24.
On Thursday, the US Energy Information Administration is due to release the latest weekly inventory data. Gelber & Associates forecasts an 80 Bcf injection for the week ended May 1, compared with 104 Bcf a year ago and a five-year average of 77 Bcf.
"If the print lands near our view, the market will likely keep watching whether LNG feedgas recovers and whether late-May power burn can build a stronger floor," the firm said in a Wednesday note.
It added that "a materially larger build would reinforce the idea that spring maintenance and mixed weather are still capping rallies, while a lighter number would make it easier for prices to hold support into the next round of heat revisions," the firm said.
Meanwhile, US lower-48 dry gas production was 110.9 Bcf/d on Wednesday, up 5.5% over the year, BNEF data showed, while net Canadian imports remained light at 4.5 Bcf/d, according to Gelber & Associates.
Lower-48 demand was 72.2 Bcf/d, up 9.5% from a year earlier, with residential and commercial demand at 17.2 Bcf/d providing the strongest support as late-season weather demand returned, Gelber & Associates said.
Demand is expected to strengthen as the US National Weather Service on Wednesday issued another winter storm warning for large parts of the Rocky Mountain states, which got hit with an unusually late snowstorm on Tuesday and Wednesday.