NEW YORK: US natural gas futures fell more than 4% on Tuesday, weighed down by expectations of rising production and milder weather that are expected to support above-average storage injections and curb demand in the coming weeks.
The front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) were down 15.4 cents, or 4.5% to $3.30 per million British thermal units (mmBtu) by 10:20 a.m. ET (1420 GMT).
“The expectation that US natural gas production is going to remain strong has been keeping a lid on the market and ... some of the global risk premium has come off as well,” said Phil Flynn, an analyst at Price Futures Group.
Trump earlier last week announced a ceasefire between US ally Israel and its regional rival Iran to halt a war that began on June 13 when Israel attacked Iran. The Israel-Iran conflict had raised alarms in a region already on edge since the start of Israel’s war in Gaza in October 2023. “We think the market has overshot to the downside and is likely to turn around shortly, but in the short term, liquidation is picking up as traders anticipate moderating weather and continued strong production,” Flynn added.
Flynn also noted that recent injections and supply levels have come in higher than expected, putting further downward pressure on prices.
Financial firm LSEG said average gas output in the Lower 48 US states rose to 105.9 billion cubic feet per day in June, up from 105.2 bcfd in May, but still below the monthly record high of 106.3 bcfd in March due primarily to normal spring pipeline maintenance earlier in the month.
LSEG estimated 182 total degree days (TDDs) over the next two weeks, compared with 199 estimated on Monday. It also forecast average gas demand in the Lower 48, including exports, dipping slightly to 105.4 billion cubic feet per day (bcfd) next week from 105.6 bcfd in the current week. The normal for this time of year is 171 TDDs. Total degree days measure the number of degrees a day’s average temperature is above or below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to cool or heat homes and businesses.
The average amount of gas flowing to the eight big US LNG export plants fell to 14.4 bcfd in June, down from 15.0 bcfd in May and a monthly record high of 16.0 bcfd in April.
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