NEW YORK: US natural gas futures edged down on Monday from a near 23-month high in volatile trading, as short-term warmer weather forecasts countered support from a rise in the amount of gas flowing to liquefied natural gas (LNG) export plants and long-term cooler forecasts.
Front-month gas futures for January delivery on the New York Mercantile Exchange were down 9.4 cents, or 2.5%, to $3.65 per million British thermal units (mmBtu) at 9:45 a.m. EST (1445 GMT).
“We saw a big spike up in prices on Sunday night, but then we’re giving back those gains. The bearish arguments are that it’s not going to be that cold and there’s still plenty of supply. The bullish arguments are if the cold does settle in, prices will stay strong. So we’re seeing kind of a volatile situation,” said Phil Flynn, an analyst at Price Futures Group.
“It really is a battle between short-term warmer forecast and longer-term forecasts for cold, and that’s why we’re seeing some extreme volatility,” Flynn said.
Financial firm LSEG estimated 370 heating degree days over the next two weeks, lower than the 10-year normal of 424 HDDs and the 30-year normal of 431 HDDs.
The amount of gas flowing to the eight big US LNG export plants rose to an average of 14.8 bcfd so far in December from 13.6 bcfd in November. That compares with a monthly record high of 14.7 bcfd in December 2023.
LSEG said average gas output in the Lower 48 US states rose to 103 billion cubic feet per day (bcfd) so far in December from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
Financial firm LSEG forecast average gas demand in the Lower 48, including exports, dropping from 132.8 bcfd this week to 121.3 bcfd next week.
“Going forward into the new year, the extended temperature forecasts suggest a lot of zig zags between colder and milder temperature trends, but it will likely require an unusually cold January to flip the long-standing storage surplus to a deficit capable of advancing this market much further,” energy advisory firm Ritterbusch and Associates said in a note.
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