US natural gas futures shed 10% on Monday to a more than four-month low as forecasts for a warmer-than-usual December soured the demand outlook for the fuel.
Front-month gas futures had slumped 41.2 cents, or 10%, their most since last Monday, to $3.72 per million British thermal units (mmBtu) by 9:06 a.m. EST (1406 GMT).
"We're seeing a lot warmer than normal weather in the forecast here, and it looks like it might be sticking around towards the third week in December, which is not sending any bullish signals to the traders," Robert DiDona of Energy Ventures Analysis said.
Since Nov. 26, the front month has dropped over 30% in six sessions and has lost about $1.7 per mmBtu, in stark contrast to the 7-year high of nearly $6.5 per mmBtu hit two months ago.
There was a lot of risk premium relating to a supply shortfall that has been taken out of the market, DiDona added.
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Global gas prices have hit record highs in recent months as utilities around the world scrambled for LNG cargoes to replenish low stocks in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China.
Tracking the global rally, US futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter.
Data provider Refinitiv said output in the US Lower 48 states has averaged 96.4 billion cubic feet per day (bcfd) so far in December, down slightly from a monthly record of 96.5 bcfd in November.
Refinitiv projected average US gas demand, including exports, would rise from 112.1 bcfd last week to 115.4 bcfd this week, but estimated a drop to 112.6 bcfd next week.
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