NEW YORK: US natural gas futures extended their rapid retreat to briefly dip below $2 per million British thermal units (mmBtu) for the first time since September 2020 in pre-market trading on Wednesday.
Prices shed almost 9% to a near 29-month low on Tuesday on forecasts for milder weather and lower than expected heating demand next week.
“The main reasons for the price slump are warmer than seasonal weather, healthy storage and strong supply,” said Ade Allen, Rystad Energy’s New York-based gas markets analyst.
“We see little upside potential for prices in the immediate future, and an oversupply scenario could materialize as early as Q2.”
Front-month gas futures for March delivery on the New York Mercantile Exchange were down 8.4 cents, or 4.6%, to $1.989 per mmBtu at 5:54 a.m. EST (1054 GMT).
Prices have shed about 55% this year on warmer forecasts, and have also been impacted by a delay in the restart of Freeport LNG’s liquefied natural gas (LNG) export plant in Texas, which was shut by a fire last year, leaving more supply for the US domestic market.
The second largest US LNG exporter has received federal approval to restart partial operations at the plant, with full capacity seen “several weeks” away. A recovery in European gas storage levels has also moderated the demand outlook for US exports.
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