US natural gas futures fell 4pc to a two-week low on Monday on rising output and forecasts milder than normal weather will continue through late October.
That mild weather will keep heating demand light and allow utilities to continue injecting more gas into storage than usual ahead of the winter.
US utilities have already injected more gas into storage than usual over the past four weeks.
Traders noted US gas futures were down even though gas prices in Europe were up about 5pc earlier in the day and US oil futures climbed to their highest since October 2014 on worries energy supplies could run short this winter.
Last week, gas prices in Europe and Asia soared to record highs on worries Europe will not have enough gas in storage for the winter heating season and as Asia's demand for the fuel remains insatiable.
Those worries boosted US gas prices to their highest since 2008 last week on expectations competition for gas from Europe and Asia would keep demand for US liquefied natural gas (LNG) exports strong.
But there is a growing belief in the market that the United States will have more than enough gas for the winter after four weeks of bigger-than-usual storage builds and a lack of capacity to produce more LNG for export.
Front-month gas futures fell 22.0 cents, or 4.0pc, to settle at $5.345 per million British thermal units (mmBtu), their lowest close since Sept. 24.
After US gas futures closed at their highest since 2008 during last week's record volatility, speculators cut their net long positions on the New York Mercantile and Intercontinental Exchanges to their lowest since April 2021 as some traders cashed in their winnings, according to data from the Commodity Futures Trading Commission (CFTC).
Data provider Refinitiv said gas output in the US Lower 48 states rose to an average of 92.3 billion cubic feet per day (bcfd) so far in October from 91.1 bcfd in September. That compares with a monthly record of 95.4 bcfd in November 2019.
Refinitiv projected average US gas demand, including exports, would rise from 84.9 bcfd this week to 86.1 bcfd next week as the weather turns seasonally cooler and more homes and businesses turn on their heaters. The forecast for next week was higher than Refinitiv expected on Friday.
With gas prices near $30 per mmBtu in Europe and $32 in Asia, versus under $6 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States could produce.
Refinitiv said the amount of gas flowing to US LNG export plants slipped from an average of 10.4 bcfd in September to 10.1 bcfd so far in October due to short-term upsets at some Gulf Coast plants and ongoing planned maintenance at Berkshire Hathaway Energy's Cove Point LNG export plant in Maryland.
Traders noted the work on Cove Point was expected to last about three weeks, meaning it should return this week.
But no matter how high global prices rise, the United States only has capacity to turn about 10.5 bcfd of gas into LNG.
Global markets will have to wait until later this year to get more from the United States when the sixth liquefaction train at Cheniere Energy Inc's Sabine Pass and Venture Global LNG's Calcasieu Pass in Louisiana are expected to start producing LNG in test mode.