NEW YORK: US natural gas futures fell about 6 percent to a two-month low on Friday on forecasts for milder weather and lower demand over the next week than previously expected.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell 15.6 cents, or 6 percent, to settle at USD2.64 per million British thermal units (mmBtu), their lowest close since August 6. The USD2.64 settle on August 6 was the lowest close since late April.
That also put the front-month down about 15 percent for the week and left the contract in technically oversold territory for a third day in a row for the first time since July.
In a sign the market is not too worried about supply meeting demand in coming months, futures for calendar 2027 fell to an almost five-year low of USD3.08 per mmBtu, while the 12-month futures strip dropped to a two-year low of USD2.90.
OUTPUT REBOUNDS AS STORAGE CUSHION THINS
Financial firm LSEG said average gas output in the US Lower 48 states slid to 111.6 billion cubic feet per day (bcfd) so far in October, down from record highs of 113.3 bcfd in both August and September.
On a daily basis, output has recovered, averaging about 113.3 bcfd over the past week.
Record output and mild spring weather earlier this year has allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, reaching a high of 7.7 percent above normal in April.
But hotter-than-normal weather over the summer forced energy firms to pull lots of gas out of storage to fuel power plants needed to keep air conditioners humming, cutting the inventory surplus. About 40 percent of US power generation comes from gas-fired plants.
The amount of gas in storage likely fell to 0.7 percent above normal during the week ended October 23, down from 1.0 percent above normal in the previous week, according to analyst estimates ahead of next Thursday’s weekly federal inventory report.
Looking ahead, meteorologists predicted weather across the country would remain mostly milder than normal through November 7, which should keep heating demand low in coming weeks.
Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 106.7 bcfd this week to 107.3 bcfd next week and 112.5 bcfd in two weeks. The forecast for next week was lower than LSEG’s outlook on Thursday.
Average gas flows to the nine major US LNG export plants rose to 18.2 bcfd so far in October, up from 17.9 bcfd in September. That is still below the monthly record high of 18.8 bcfd in April.
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