US natural gas futures fell to their lowest in almost four-years on Monday on forecasts for warmer weather through mid-February than previously expected. "There is not yet enough expectations for significant late-winter weather to get the market really excited," Daniel Myers, market analyst at Gelber & Associates in Houston, said in a report.
Traders also said the gas market was weighed down by a sharp drop in crude futures, which fell to their lowest since January 2019 due to worries the coronavirus will reduce global oil demand. Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) fell 2.2 cents, or 1.2%, to settle at $1.819 per million British thermal units (mmBtu), their lowest since March 2016.
Since hitting an eight-month high of $2.905 per mmBtu in early November, futures have collapsed 37%. Record production and mild weather have enabled utilities to leave more gas in storage, making shortages and winter price spikes less likely. Lack of supply concerns caused speculators last week to boost short positions on the NYMEX by the most since October 2018 to an all-time high. But an increase in speculative longs on the NYMEX to their highest since April helped trim net shorts on the NYMEX and Intercontinental Exchange for the first time in four weeks, according to US Commodity Futures Trading Commission data going back to 2010.
Meteorologists projected the weather in the US Lower 48 states will remain near- to warmer-than-normal through February 18. That is warmer than Friday's outlook, which called for cold from February 11-15. Refinitiv projected average demand in the Lower 48 states, including exports, would rise from 117.0 billion cubic feet per day (bcfd) this week to 122.3 bcfd next week. That is lower than Refinitiv's estimates on Friday of 117.6 bcfd for this week and 126.9 bcfd for next week due to lower heating demand forecasts.
The amount of gas flowing to US LNG export plants held at 9.3 bcfd Sunday, the same as Saturday, according to Refinitiv data. That compares with an average of 9.3 bcfd last week and an all-time daily high of 9.5 bcfd on January 31. Gas output in the Lower 48 states edged up to 94.4 bcfd Sunday from 94.1 bcfd Saturday, according to Refinitiv. That compares with an average of 94.1 bcfd last week and an all-time high of 96.8 bcfd on November 30.