US natgas futures slip 2pc on milder-than-normal weather through mid-January

US natural gas futures slipped about 2% on Wednesday on forecasts for steady, milder-than-normal weather over the next two weeks.

Traders noted that US price decline came despite a rise in futures in Asia to their highest since 2013 for a second day in a row, prompting global buyers to seek more US liquefied natural gas (LNG).

Front-month gas futures fell 5.7 cents, or 2.1%, to $2.645 per million British thermal units at 7:45 a.m. EST (1245 GMT). On Tuesday, the contract closed at its highest since Dec. 22.

In the spot market, meanwhile, a shot of cold boosted heating demand in the US Mid-Atlantic and pushed next-day gas at the Dominion South hub in southwest Pennsylvania to their highest since November 2019.

Data provider Refinitiv said output in the Lower 48 US states averaged 91.9 billion cubic feet per day (bcfd) so far in January. That compares with an eight-month high of 91.5 bcfd in December 2020 and an all-time monthly high of 95.4 bcfd in November 2019.

Even though the weather was expected to remain milder-than-normal, temperatures will continue to drop into mid January. Refinitiv projected that cold would boost average demand, including exports, to 126.3 bcfd next week from 121.1 bcfd this week.

The amount of gas flowing to US LNG export plants averaged 10.7 bcfd so far in January, matching December's record.

That all-time LNG export high came as gas prices this week hit their highest since February 2013 in Asia and January 2019 in Europe.

Traders, however, noted US LNG exports cannot rise much more until new units enter service in the second half of 2022 since feedgas to the LNG plants was already over their 10.5-bcfd export capacity. LNG plants can pull in a little more gas than they can export since they use some of the fuel to run the facility.