CHICAGO: US natural gas futures fell to a four-week low on Monday as production increased and on forecasts for milder weather and less demand over the next two weeks than previously expected.
Traders noted cooler weather would cut the amount of gas power generators burn to keep air conditioners humming.
Front-month gas futures fell 6.1 cents, or 2.1%, to $2.845 per million British thermal units at 9:07 a.m. EDT (1307 GMT), putting the contract on track for its lowest close since April 26.
That also put the front-month down for a fifth day in a row for the first time since early March.
Speculators, meanwhile, boosted their net long gas futures and options positions on the New York Mercantile and Intercontinental Exchanges for a third week in a row last week for the first time since February.
They increased those long position to their highest since March on expectations US prices would rise as buyers around the world continue to purchase near-record amounts of US gas because prices in Europe and Asia remain high enough to justify the cost of buying and transporting the US fuel across the ocean.
Data provider Refinitiv said gas output in the Lower 48 US states averaged 90.9 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April. That is still well below November 2019’s monthly record of 95.4 bcfd.
With the milder weather on the horizon, Refinitiv projected average gas demand, including exports, would ease from 85.0 bcfd this week to 84.6 bcfd next week. The forecast for next week was lower than Refinitiv forecasts on Friday.
The amount of gas flowing to US LNG export plants averaged 10.9 bcfd so far in May, down from April’s monthly record of 11.5 bcfd. The decline was due to short-term issues and normal spring maintenance at a few Gulf Coast plants and the gas pipelines that supply them.
US pipeline exports to Mexico, meanwhile, averaged 6.0 bcfd so far in May, just off April’s monthly record of 6.1 bcfd, Refinitiv data showed.