Declining LNG exports are weighing on prices

The recent decline in US LNG exports has given the market a pessimistic mood. Feed gas flows to U.S. LNG terminals fell to 11.8 billion cubic feet per day (Bcf/d) on Tuesday, down 0.7 Bcf/d from Monday, marking the second straight day of declines. The decline is due to ongoing maintenance at the Cameron LNG plant in Louisiana, which is limiting operating capacity. This decline in exports eliminates an important support for natural gas prices, especially in times of lower domestic consumption.

As the off-season continues, when demand for heating or cooling is typically lower, weaker LNG exports add to downside risks in the market.

Mild weather forecast dampens demand prospects

Mild weather across most of the U.S. continues to limit natural gas demand. Despite a slight increase in demand forecasts from both the Global Forecast System (GFS) and the European Center (EC) model on Monday, overall consumption remains weak. Cooler temperatures are forecast in the Northwest and upper Midwest, with highs in the 40s to 50s and lows in the 20s to 30s. However, most of the U.S. will experience milder conditions, with temperatures between 60 and 80 degrees, reducing the need for heating.

Despite some heat demand in the northern regions, the overall national forecast for gas consumption remains negative.

The market focus is shifting to supply and storage data

Rising natural gas production is creating further downward pressure. Thursday’s weekly EIA storage report is expected to show an increase of 61 Bcf, signaling ample supply amid weak demand. Market sentiment remains cautious as traders weigh the potential for near-term profit-taking against the longer-term risks of oversupply.

As production continues to rise and LNG exports weaken, traders expect a pessimistic near-term outlook.