NEW YORK: US natural gas futures held near a one-week low on Friday on forecasts for milder weather and lower demand over the next two weeks than previously expected.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 0.5 cents, or 0.2percent, to USD2.962 per million British thermal units (mmBtu), putting the contract on track for its lowest close since September 21.
That also put the front-month down about 7percent this week after it jumped about 10percent last week.
Looking ahead, futures for calendar 2027 dropped to an average of USD3.21 per mmBtu, their lowest price since February 2022, while the 12-month futures strip fell to USD3.06, its lowest since November 2024.
In another sign the market is not too worried about gas supplies this winter, the premium of futures for March over April 2027 fell to a record low of just 8 cents per mmBtu.
Analysts say March, the last month of the winter season, when demand is high and utilities pull gas from storage to heat homes and businesses, should never trade below April, the first month of the summer season, when demand is low and energy firms produce enough gas to inject fuel into storage for the next winter.
The industry calls the March-April spread the “widow-maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business. Notably, the Amaranth hedge fund lost more than USD6 billion in 2006.
Financial firm LSEG said average gas output in the US Lower 48 states slid to 112.2 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 in both August and September.
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, reaching a high of 7.7percent above normal in April.
A hot summer, however, forced energy firms to pull lots of gas out of storage to fuel the power plants needed to keep air conditioners humming, cutting the inventory surplus. About 40percent of US power generation comes from gas-fired plants.
With the weather still warmer than normal this week, the amount of gas in storage likely slid to 1.8percent above normal during the week ended October 2, down from 2.4percent above normal in the previous week, according to analyst estimates ahead of next Thursday’s weekly federal inventory report.
Looking forward, meteorologists predicted weather across the country would remain mostly near normal through October 17, which should keep both heating and cooling demand low.
But with the weather turning seasonally cooler, LSEG said average gas demand in the Lower 48 states, including exports, will rise from 102.3 bcfd this week to 104.5 bcfd over the next two weeks. The forecasts for this week and next were lower than LSEG’s outlook on Thursday.
Average gas flows to the nine large US LNG export plants fell to 17.0 bcfd so far in October, down from 17.9 bcfd in September and the monthly record high of 18.8 bcfd in April.
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