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U.S. natural gas futures fell Wednesday by the most since mid-January on prospects of an increase in already hefty excess storage and signs of ongoing issues at a major U.S. LNG export terminal.
On Thursday, the U.S. Energy Information Administration will release its weekly natural gas supply report, and analysts polled by S&P Global Commodity Insights forecast an increase of 79B cf for last week, compared to a five-year average increase of 59B cf.
Analysts surveyed by The Wall Street Journal predict an injection of 80B cf into underground storage last week to more than 2.4T cf, or 36% above the five-year average.
Also, the first tanker in 12 days reportedly set sail from Freeport LNG's Texas export terminal on Tuesday, signaling the resumption of gas processing after an outage earlier this month.
Freeport LNG has suffered several outages this year with all processing units recently out of service, pressuring U.S. natural gas prices and even prices in Europe.
Front-month Nymex natural gas (NG1:COM) for May delivery closed -8.7% to $1.653/MMBtu, its lowest settlement value since March 26; front-month U.S. natgas is down 34% YTD.
ETFs: (NYSEARCA:UNG), (BOIL), (KOLD), (UNL), (FCG)
Wednesday's rout wiped out gains made earlier this week on a pickup in weather-related demand and LNG feedgas flows.
Mixed weather in the "shoulder season" - the period after winter but before the summer - is expected to "maintain the [supply] surplus, with recent weather data indicating light demand for natural gas," Schneider Electric's Victoria Dircksen told Marketwatch.