NEW YORK: US natural gas futures slipped for a third straight session to their lowest in a month on Tuesday, weighed down by lower heating demand as weather moderates with sufficient inventory in storage.
Front-month gas futures for April delivery traded 6.6 cents lower, or 3%, to $2.16 per million British thermal units (mmBtu) at 10:47 a.m. EDT (1447 GMT) after hitting a fresh low since Feb. 23 earlier.
“We’re seeing a combination of weather softening and lower feed gas into some of the LNG plants, which basically has us in a more surplus environment than we were just a few days ago,” said Gary Cunningham, director of market research at Tradition Energy.
“The weather forecast, if you go back two or three weeks, had shown a cold end to March and now those forecasts have revised warmer, which is less supportive to the market.”
Refinitiv forecast US gas demand, including exports, would slide from 115.1 billion cubic feet per day (bcfd) this week to 108.3 bcfd next week.
There are also concerns that the production is going to falter because of the low prices, said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Refinitiv said average gas output in the US Lower 48 states rose to 98.7 bcfd so far in March from 98.2 bcfd in February. That compares with a monthly record of 99.9 bcfd in November 2022.
Analysts said production declined earlier this year due in part to gas price declines of 40% in January and 35% in December that persuaded several energy firms to reduce the number of rigs they were using to drill for gas.
In addition, extreme cold in early February and late December cut gas output by freezing some oil and gas wells in several producing basins. Milder winter weather this year has prompted utilities to leave more gas in storage than usual.
Gas stockpiles were about 24% above their five-year average (2018-2022) during the week ended March 10 and were expected to end about 16% above normal during the colder-than-normal week ended March 17, according to federal data and analysts’ estimates.
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