US natural gas futures gave back early-week gains in after-hours trade on Friday ahead of the Memorial Day weekend, as the season's first major heat wave faded and forecasts turned cooler, pressuring near-term demand expectations.
The front-month Henry Hub contract fell 3.21% to $2.921 per million British thermal units, while the continuous contract dropped 3.87% to $3.034/MMBtu.
Power-sector demand briefly surged to unusually strong levels for mid-May earlier in the week, but traders faded as cooler forecasts spread across the Southeast and Northeast.
Lower-48 gas demand was estimated at 69.1 Bcf/d on Friday, down 2.1 Bcf/d day over day and 3.9% below year-earlier levels. Celsius Energy estimated power burn at 21.6 Bcf/d, down 2.8 Bcf/d from Thursday but still 1.9 Bcf/d above the same period last year.
Despite weakened demand sentiment, the Energy Buyers Guide said underlying market risks remain, including stagnant US production growth, lower Canadian imports, reduced LNG flows due to maintenance outages, and storage inventories that continue to lag year-ago levels.
Regarding Output, Barchart, citing BNEF data, said Lower-48 dry gas production was estimated at 110.1 Bcf/d on Friday, down 300 MMcf/d from Thursday but up 1.9% year over year.
Gelber & Associates said recovering Appalachian output and stable pipeline inflows continue to reinforce a relatively comfortable supply backdrop, even with historically strong LNG export demand. The firm noted Appalachian production has rebounded above 36.0 Bcf/d as maintenance rolls off.
"That leaves Henry Hub vulnerable to continued rangebound trade unless either LNG demand accelerates further through commissioning activity and summer ramp-ups or the weather pattern shifts back toward sustained heat," Gelber said.
LNG feedgas remained a strong support for the market. Net flows to US LNG export terminals were estimated at 18.3 Bcf/d on Friday, up 2.8% from a week earlier as Corpus Christi Stage 3 continued ramping despite maintenance at Freeport and Cameron.