NEW YORK: US natural gas futures fell more than 2% in holiday-thin trading on Tuesday, pressured by record gas production and a mild weather outlook for the short term suggesting limited heating demand.
Front-month gas futures for January delivery on the New York Mercantile Exchange settled down 6.1 cents, or 2.3%, at $2.55 per million British thermal units. Prices fell as much as 6% earlier in the session.
Trading was thin on the day after Christmas and is expected to remain muted across the shortened week.
“The combination of high natural gas production, low weather-related demand because of the holiday and then the moderate temperature forecast is just all turning into a bearish price environment for the natgas market,” said Robert DiDona of Energy Ventures Analysis. “But we will end up finding some good support because January is right around the corner and that usually brings the seasonal uplift in total demand estimates.”
Financial firm LSEG forecast US gas demand in the Lower 48, including exports, at 120.8 bcfd this week, down from last week’s 126.6 bcfd, weighed down by limited heating demand as businesses and government offices were shut for the Christmas week. However, demand was projected to rise to 133.7 bcfd during the next week as forecast for January gets colder.
LSEG said average gas output in the Lower 48 US states has risen to 108.7 bcfd so far in December from a record 108.3 bcfd in November.
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