-- US natural gas futures declined on Wednesday, tracking declines in crude as energy markets reacted to reports that Iran is reviewing a US-backed peace proposal that could ease tensions in the Strait of Hormuz and restore critical global shipping flows.
The front-month Henry Hub contract and the continuous benchmark both fell 2.33% to $2.724 per million British thermal units.
Analysts said the move largely followed the drop in oil prices alongside subdued near-term weather-driven demand.
"This market appears to be seeing spillover from the huge decline in oil pricing, and with the weather factor offering little support," Ritterbusch & Associates said in a note cited by the Wall Street Journal.
The Strait of Hormuz remains a key geopolitical focal point, with any de-escalation seen as potentially restoring stable flows of liquefied natural gas to Asian buyers, who account for a large share of global LNG demand.
On the domestic side, US fundamentals remain broadly stable. Production is forecast to hold near 107.3 billion cubic feet per day, roughly in line with recent levels and slightly above April averages, NRG Energy said.
Demand trends were mixed. According to Aegis Hedging, residential and commercial consumption rose by 2.5 Bcf/d, offsetting a 1.4 Bcf/d decline in power burn demand.
Looking ahead, weather models show short-term cooling across the Midwest before a shift to above-normal temperatures in western regions next week, which could support cooling demand later in the month. Ritterbusch said it still sees upside risk for prices over the next one to two months if hotter weather materializes.
Storage expectations remain in focus ahead of Thursday's government report. NRG Energy said it expects a 70 Bcf injection for the week ending May 1, below both last year's build and the five-year average. Even so, inventories are projected to remain about 7% above the seasonal norm.
Liquefied natural gas export demand is currently subdued, with feedgas flows forecast around 17 Bcf/d, NRG said. Lower volumes at the Corpus Christi and Cameron facilities due to maintenance are weighing on exports, limiting near-term support for prices.