NEW YORK: US natural gas futures eased about 1% on Monday to a fresh three-year low on near-record output, ample amounts of fuel in storage, less heating demand next week than previously expected, and a decline in global gas prices.
Traders also said the amount of gas flowing to US liquefied natural gas (LNG) export plants would remain low while a unit remained shut at Freeport LNG’s facility in Texas.
The combination of near-record production and mostly warmer-than-usual weather and low heating demand so far this winter, other than mid-January’s Arctic freeze, has allowed utilities to leave more gas in storage. Analysts forecast inventories were currently about 15% above normal levels for this time of year.
Energy traders said low prices usually encourage power generators to burn more gas instead of coal and prompt producers to cut back on gas drilling.
But with the retirement of dozens of coal plants in recent years, there’s not much coal left to replace. At the same time, renewable sources of power like wind and solar continue to take market share from fossil fuels.
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