NEW YORK: US natural gas futures fell more than 5% on Wednesday, driven by record production levels and predictions of milder weather over the next two weeks than previously expected, which could dampen heating demand and enable utilities to draw less gas from storage.
Front-month gas futures for April delivery on the New York Mercantile Exchange were down 22.7 cents, or 5%, at $4.23 per million British thermal units (mmBtu) as of 9:17 a.m. EDT. Prices rose to their highest level since December 2022 on Monday but fell 0.9% in the previous session.
“I think the run-up this week was largely inspired by technical factors and bigger macro funds, but the weather this week has been rather bearish, so I think today’s action is just really a reflection,” said Kyle Cooper, energy market analyst at IAF Advisors.
Financial firm LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 111.6 bcfd this week to 104.3 bcfd next week. This was a decrease from Tuesday’s forecast of 113.3 bcfd for next week.
Meanwhile, LSEG said average gas output in the Lower 48 US states has risen to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February.
LSEG estimated there would be 198 heating degree days over the next two weeks in the Lower 48 US states, down from the 213 HDDs estimated on Tuesday. The normal level is 243 HDDs for this time of year.
Gas prices rose more than 14% last week on record flows to LNG plants and worries Canada would reduce power and gas exports to the US after President Donald Trump imposed tariffs on Canada and Mexico on March 4.
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