NEW YORK: US natural gas futures fell to a more than one-week low on Monday, pressured by record output and forecasts for milder weather and lower demand in the coming weeks than previously expected.
Front-month gas futures for September delivery on the New York Mercantile Exchange fell 3.4 cents, or 1.2percent, to USD2.70 per million British thermal units (mmBtu), the lowest since August 7.
“Over the weekend we got some weather model moderation and the storage injection schedule over the next few weeks rose, which is indicating more of a bearish market condition,” said Robert DiDona, president of Energy Ventures Analysis.
Financial firm LSEG said average gas output in the US Lower 48 states was up to 111.6 billion cubic feet per day (bcfd) so far in August, up from a monthly record high of 110.7 bcfd in July.
Record output and mild spring weather this year have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
Gas inventories have remained in surplus despite weeks of above-normal temperatures this summer.
Meteorologists forecast milder weather than previously expected nationwide in the coming weeks, as Cooling Degree Days fell to 216 on Monday from 222 on Friday. CDDs measure energy demand to cool buildings.
LSEG projected average gas demand in the Lower 48 states, including exports, would slip from 114.2 bcfd this week to 113 bcfd next week.
Average gas flows to the nine big US LNG export plants stand at 17.3 bcfd so far in August, up from 17.2 bcfd in July and slightly lower from a monthly record high of 17.4 bcfd in June.
“Today’s lower prices are setting the market up for a test of nearest support at the USD2.62 level that is beginning to appear vulnerable to violation with the current temperature outlooks beginning to suggest increased possibility of a decline to long-term price support at the USD2.50 area,” consultancy Ritterbusch & Associates said in a note.
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