NEW YORK: US natural gas futures dropped about 6% to a one-month low on Thursday on a bigger-than-expected weekly storage build and rising output that should allow energy firms to keep injecting more gas into storage than usual in coming weeks.
On their last day as the front-month, gas futures for July delivery on the New York Mercantile Exchange fell 20.7 cents, or 6.1%, to $3.199 per million British thermal units (mmBtu) at 10:38 a.m. EDT (1438 GMT), putting the contract on track for its lowest close since May 19.
That decline put the front-month down for a fifth day in a row for the first time since August 2024. The August futures, which will soon be the front-month, were trading down about 4.0% to $3.43 per mmBtu.
The US Energy Information Administration (EIA) said energy firms added 96 billion cubic feet (bcf) of gas into storage during the week ended June 20, marking the 10th week in a row that storage builds were bigger than the five-year normal for this time of year.
That was more than the 88-bcf build analysts forecast in a Reuters poll and compares with an increase of 59 bcf during the same week last year and an average increase of 79 bcf over the past five years (2020-2024).
Even though meteorologists forecast the weather will remain hotter than normal for at least the next two weeks, temperatures were not expected to return to the highs seen during this week’s heatwave.
Tuesday was the hottest day in more than a decade for millions of residents across the US Northeast, weather forecaster AccuWeather reported, noting temperatures in Philadelphia and Boston hit 100 degrees Fahrenheit (37.8 Celsius), while New York City broke the record high from an 1888 heatwave.
To escape that heat, homes and businesses cranked up air conditioners, boosting power prices to their highest levels since January in some markets and stressing regional power grids.
Even though power generators burned more gas during heat waves to produce electricity to keep the air conditioners humming, gas prices dropped about 23% since hitting an 11-week high of around $4.15 per mmBtu on June 20.
With futures for the rest of the summer trading well below last week’s high, with July at $3.20 per mmBtu and August at $3.42, analysts have started to say the market may have already seen its highest price for the summer on June 20.
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