NEW YORK: US natural gas futures plunged about 13% to a one-week low on Tuesday on forecasts for demand to drop and output to rise once the weather turns warmer than normal in late January. Also weighing on prices, the amount of gas flowing to US liquefied natural gas (LNG) export plants dropped on Monday to a three-month low. Still, spot power and gas prices soared to multi-year highs as extremely cold weather cut gas supplies and was on track to boost daily demand to a record high.

“It appears that the run-up last week may have been overly reactive to news of the cold. As the adage goes, ‘buy the rumour, sell the news’ and today appears to be the latter half on full display,” analysts at energy consulting firm Gelber and Associates told customers in a note explaining the massive drop in futures prices.Last week, futures jumped about 15% for a second week in a row due primarily to worries about what this week’s extreme cold would do to gas supplies and demand.

The futures market is trading for February, when analysts said the country should have enough production and gas in storage to meet at least normal weather conditions without boosting prices much.

Front-month gas futures for February delivery on the New York Mercantile Exchange fell 41.3 cents, or 12.5%, to settle at $2.900 per million British thermal units (mmBtu), their lowest close since Jan. 5 and the front-month’s biggest daily percentage drop since it fell about 15% on March 6, 2023.