Commodities
US Natural Gas Update: Futures Hit Fresh 2-Month Lows Amid Robust Supply, Weaker LNG Flows
US natural gas futures slipped about 1% in early Tuesday trade to hit fresh two-month lows, weighed down by higher production and expectations of relatively limited sustained short-term demand.The front-month Henry Hub contract, along with the continuous contract, was down about 1% at $2.868 per million British thermal units."The steep drop in near-term pricing reflects a market that continues to discount summer risk amid comfortable storage levels, softer LNG feedgas demand and limited evidence of sustained weather-driven tightening," Pinebrook Energy Advisors said in a note on Monday.Temperatures across the Midwest and East are expected to rise sharply this week, but only for a short time. Cooler weather is forecast to return soon, reducing the chances of an extended surge in cooling demand, it said."With Freeport LNG maintenance also weighing on feedgas demand and inventories maintaining a healthy surplus to the five-year average, the market remains firmly focused on increasingly loose near-term fundamentals," the note added.The US National Weather Service on Tuesday said the Intermountain West, Northern Plains, and Upper Great Lakes are experiencing a significant heatwave, with peak intensity expected through midweek.The heatwave is likely to remain in parts of the Northern Plains and the Midwest until this weekend, the agency said.According to Gary Cunningham of Tradition Energy, while gas markets are struggling to gain a foothold, "eastern power markets are seeing a return of elevated temperatures and prices."According to Barchart, natural gas production in the Permian Basin climbed above 23 billion cubic feet per day over the weekend, the highest level in two months.At the same time, gas flows to US LNG export terminals fell to 17.5 Bcf/d on Monday, the lowest level in a month, leaving more gas available for the domestic market.Citing BNEF data, Barchart said Lower 48 dry gas production reached a robust 113.2 Bcf/d on Monday, up 5.5% from a year earlier and well above the US Energy Information Administration's projected record annual average of 111.1 Bcf/d for 2026. Lower 48 gas demand was estimated at 77.4 Bcf/d, up 4.2% year over year.BNEF estimated net LNG feedgas deliveries to US export terminals at 17.5 Bcf/d on Monday, down 5.8% from the previous week.Meanwhile, the ongoing Middle East conflict and delays in major projects have pushed an anticipated liquefied natural gas supply glut back by a year, with oversupply now projected in 2028, according to an analysis by BloombergNEF on Tuesday.A global LNG supply surplus is expected to peak in 2031-2032, with many new projects likely to come online, according to BNEF's global LNG outlook. Last year's report projected a glut starting in 2027.
