NEW YORK: US natural gas futures fell 4% on Friday, weighed down by forecasts for warmer-than-usual weather and a steady rise in production. Front-month gas futures for January delivery slipped 11.8 cents, or 4%, to settle at $2.843 per million British thermal units. For the week, the front-month was up more than 7%, its biggest weekly percentage rise in four.
"The lack of real colder weather forecasts and a bountiful supply in the market when demand is not supposed to be very high is certainly curtailing prices," said Robert DiDona of Energy Ventures Analysis.
"If we don't start getting some colder weather for the middle to second half of December, I think the January contract could continue to fall," he added. Data provider Refinitiv estimated 365 heating degree days (HDDs) over the next two weeks in the lower 48 US states, slightly below the 30-year average of 378.
HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 Celsius) and are used to estimate demand to heat homes and businesses. Gas production in the lower 48 US states has averaged 90.3 billion cubic feet per day (bcfd) so far in November, up from a five-month low of 87.4 bcfd in October.
Rising oil prices over the last few months have prompted energy firms to drill for more crude. Those oil wells also produce a lot of associated gas. Refinitiv projected gas demand, including exports, would rise to an average of 120.3 bcfd next week from an average around 113.3 bcfd forecast this week.
Feedgas to the LNG export plants has averaged 9.9 bcfd so far in November, up from a five-month high of 7.7 bcfd in October, as rising prices in Europe and Asia in recent months have prompted global buyers to purchase more US gas.