Adds EIA Storage Report, Latest Prices

By Scott Disavino

May 23 (Reuters) - U.S. Natural Gas Futures Slid About 2% on Thursday From a Four-Month High in the Prior Session on Signs Recent High Prices Have Prompted an Increase in Production.

That Price Decline Came Despite a Federal Report Showing the Amount of Gas Injected Into Storage Last Week Was Lower Than Expected. Traders Said Storage Builds Have Been Lower Than Usual Over the Past Four Weeks Despite Mostly Mild Weather That Kept Heating and Cooling Demand Low Due to Output Cuts in Recent Months.

The U.S. Energy Information Administration (EIA) Said Utilities Added 78 Billion Cubic Feet (Bcf) of Gas Into Storage During the Week Ended May 17.

THat Was Lower Than the 85-Bcf Build Analysts Forecast in a Reuters Poll and Compares With an Increase of 97 Bcf in the Same Week Last Year and a Five-Year (2019-2023) Average Rise of 91 Bcf for This Time of Year. EIA/Gas Ngas/Poll

THat Build Left Gas Stockpiles About 29% Above Normal Levels for This Time of Year.

Front-Month Gas Futures Ngc1 for June Delivery on the New York Mercantile Exchange Fell 6.4 Cents, or 2.3%, to $2.778 per Million British Thermal Units (Mmbtu) at 10:35 A.m. Edt (1435 Gmt). on Wednesday, the Contract Closed at Its Highest Since Jan. 17.

Despite the Decline, the Front-Month Remained in Technically Overbought Territory for a 15TH Day in a Row for the First Time Since June 2016.

In Other News, Power Use in Texas Was on Track to Break the Record for the Month of May for a Second Time This Week on Friday and Could Top That Again Over the Memorial Day Weekend as Homes and Businesses Crank up Their Air Conditioners to Escape a Heat Wave.

In the Spot Market, Next-Day Power at the Palo Verde Hub El-Pk-Plvd-Snl in Arizona and South Path-15 (SP-15) El-Pk-SP15-Snl in Southern California Remained in Negative Territory for a Second Day This Week.

U.S. Next-Day Power and Gas Prices Have Turned Negative Several Times Already in 2024, Especially in Texas, Arizona and California. Prices at Palo Verde Have Averaged Below Zero 16 Times so Far This Year Versus Just Once in the Past in 2019. SP-15 Prices, Which Never Averaged Below Zero Before This Year, Have Already Hit That Mark 13 Times.

Supply and Demand

Financial Firm Lseg Said Gas Output in the Lower 48 U.S. States Fell to an Average of 97.4 Billion Cubic Feet per Day (Bcfd) so Far in May, Down From 98.2 Bcfd in April. That Compares With a Monthly Record of 105.5 Bcfd in December 2023.

On a Daily Basis, However, Output Was up About 0.9 Bcfd Since Hitting a 15-Week Low of 96.2 Bcfd on May 1. Energy Traders Said That Increase Was a Sign That the 63% Gain in Futures Prices Over the Past Three Weeks Prompted Some Drillers to Start Producing More Gas.

Overall, U.S. Gas Production Was Down Around 8% so Far in 2024 After Several Energy Firms, Including EQT Eqt.n and Chesapeake Energy Chk.o, Delayed Well Completions and Cut Back on Other Drilling Activities After Prices Fell to 3-1/2-Year Lows in February and March.

EQT Is the Biggest U.S. Gas Producer and Chesapeake Is on Track to Become the Biggest Producer After Its Merger With Southwestern Energy Swn.n.

Lseg Forecast Gas Demand in the Lower 48, Including Exports, Would Ease From 92.5 Bcfd This Week to 91.6 Next Week.

Gas Flows to the Seven Big U.S. LNG Export Plants Rose From an Average of 11.9 Bcfd in April to 12.7 Bcfd so Far in May With the Return of Freeport Lng's 2.1-Bcfd Plant in Texas. That Compares With a Monthly Record of 14.7 Bcfd in December.

(Reporting by Scott Disavino;
Editing by Alison Williams and Marguerita Choy)

((Scott.disavino@Thomsonreuters.com; +1 332 219 1922; Reuters Messaging: Scott.disavino.thomsonreuters.com@Reuters.net))

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To Determine Cftc Managed Money Net Position Add (Nymex Henry Hub Options and Futures Combined 3023651Mnet) Plus (Ice Henry Hub Options and Futures Combined 3023391Mnet Divided by Four) Plus (Nymex Henry Hub Swaps Options and Futures Combined 303565Bmnet Divided by Four) Plus (Nymex Henry Hub Penultimate Gas Swaps 303565Cmnet Divided by Four)

Nymex Henry Hub Options and Futures Combined 0#3Cftc023651

Nymex Henry Hub Futures Only 0#1Cftc023651

Ice Henry Hub Options and Futures Combined 0#3Cftc023391

Nymex Henry Hub Swaps Options and Futures Combined 0#3Cftc03565B

Nymex Henry Hub Penultimate Gas Swaps 0#3Cftc03565C