NEW YORK: US natural gas futures slid about 2percent to a two-week low on Thursday on record output and ample amounts of gas in storage.
Front-month gas futures for October delivery on the
New York Mercantile Exchange fell 4.5 cents, or 1.6percent, to USD2.777 per million British thermal units, putting the contract on track for its lowest close since August 25 for a second day in a row.
Looking ahead, futures for calendar 2027 fell to USD3.26 per mmBtu, their lowest since February 2022, a sign the market is not too worried about supply meeting demand next year,
Prices declined despite expectations a federal report on Thursday will show that hot weather and high air conditioning demand last week caused energy firms to add less gas to storage than usual for this time of year.
Analysts forecast energy firms added 31 billion cubic feet (bcf) of gas to storage during the week ended September 4.
That compares with an increase of 69 bcf during the same week last year and a five-year (2021-2025) average increase of 52 bcf for the period.
Financial firm LSEG said average gas output in the US Lower 48 states rose to 113.4 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March.
Meteorologists forecast the weather will remain mostly warmer than normal through September 25, pushing power generators to continue burning more gas than usual to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants.
LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 111.7 bcfd this week to 109.9 bcfd next week. Those forecasts were higher than LSEG’s outlook on Wednesday.
Average gas flows to the nine big US LNG export plants rose to 18.3 bcfd so far in September, up from 17.2 bcfd in August, but still short of the monthly record high of 18.8 bcfd in April.
The US became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost US gas.
Around the world, gas traded near 44-month highs of around USD28 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and USD25 at the Japan-Korea Marker benchmark in Asia.
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