NEW YORK: US natural gas futures fell about 6percent on Wednesday ahead of contract expiration on forecasts for less cold weather and lower heating demand over the next two weeks than previously expected.
In addition, traders noted prices were down as output slowly climbed as frozen oil and gas wells thawed.
On its last day as the front-month, gas futures for February delivery on the New York Mercantile Exchange fell 43.4 cents, or 6.2percent, to USD6.520 per million British thermal units (mmBtu). On Tuesday, the contract closed at its highest since December 2022, after soaring by a record 124percent over the past six days.
Futures for March, which will soon be the front-month, were down about 2percent to USD3.76 per mmBtu.
As the brutal freeze slowly eases its icy grip on the rest of the country, it remains extremely cold in the US Northeast where next-day power prices soared by 100percent to a record USD314 per megawatt-hour for Wednesday in New England. That was just one of many price records seen in the spot power and gas markets this week.
Financial firm LSEG said average gas output in the Lower 48 states dropped to 106.1 billion cubic feet per day (bcfd) so far in January, down from a monthly record high of 109.7 bcfd in December.
On a daily basis, output was on track to rise for a third day in a row to 97.5 bcfd on Wednesday after collapsing to a two-year low of 92.5 bcfd on Sunday due mostly to freezing wells in Texas, Louisiana and Oklahoma, according to LSEG data. That compares with a recent high of 110.0 bcfd on January 12 and an all-time daily high of 111.2 bcfd on December 21.
That means output fell about 17.5 bcfd from January 13-25. In past winters, freezing wells, known as freeze-offs in the energy industry, have slashed gas output by massive amounts, including the loss of around 17.2 bcfd from January 8-16 in 2024, cuts of 15.8 bcfd from December 20-24 in 2022 and a drop of 20.4 bcfd from February 8-17 in 2021, according to LSEG data.
Meteorologists projected weather across the country would remain mostly colder than normal through February 12 — though not nearly as cold as the weekend of January 24-25.
LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 169.2 bcfd this week to 155.0 bcfd next week. The forecast for next week was higher than LSEG’s outlook on Tuesday.
On a daily basis, LSEG said total demand reached 174.9 bcfd on January 26, which was lower than its 176.2 bcfd forecast on Tuesday. That compares with the Lower 48 daily all-time high of 181.2 bcfd on January 21, 2025.
Average gas flows to the eight large US LNG export plants fell to 17.7 bcfd so far in January, down from a monthly record high of 18.5 bcfd in December.
On a daily basis, however, LNG feedgas was on track to rise for a second day in a row to 16.4 bcfd on Wednesday after dropping to a one-year low of 11.5 bcfd on Monday due to reductions at several plants during the weekend winter storm, including at Freeport LNG in Texas and Elba Island in Georgia.