NEW YORK: US natural gas futures on Wednesday snapped a three-session gaining streak as concerns about another lockdown due to surging coronavirus infections clouded demand outlook.
The August gas futures contract fell 8 cents, or 4.6%, to settle at $1.671 per million British thermal units, having hit its highest since June 12 in the last session.
The front-month contract also posted its biggest quarterly rise since June 2018 on Tuesday.
"We are seeing some investors walking away with profit as concerns of another wave of coronavirus is resurfacing on the horizon," said Raymond James analyst Muhammed Ghulam.
Increases in infection have fueled concerns of another lockdown, which could lead to closure of offices and factories, in turn reducing the demand for electricity and cooling, Ghulam added.
New US COVID-19 cases rose by more than 47,000 on Tuesday, according to a Reuters tally, the biggest one-day spike since the start of the pandemic, as the government's top infectious disease expert, Dr. Anthony Fauci, warned that number could soon double.
Prolonged lockdowns to curb the spread of the coronavirus have kept many businesses shut, cutting US LNG exports by half since the start of the year with stockpiles filling fast, expected to reach a record 4.1 trillion cubic feet by the end of October.
"The expected end of season higher storage level is the most significant factor that keeps a lid on gas prices at this point," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.
However, "several factors are still providing some support to prices: summer weather uncertainty (more on the warmer than normal side), possible damaging tropical storms, and expected gas lower production for this year."
Weather forecasts pointed toward a warm summer with Refinitiv data indicating 248 cooling degree days (CDDs) in the Lower 48 states over the next two weeks. The normal is 193 CDDs for this time of year.
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