US natural gas futures drop 5pc to 4-month low amid near-record output, mild weather

NEW YORK: US natural gas futures fell about 5percent to a four-month low on Tuesday on near-record daily output and forecasts for the weather to remain milder than normal through early March.

Mild weather should keep heating demand low and allow utilities to leave more gas in storage than usual for this time of year.

Gas futures for March delivery on the New York Mercantile Exchange fell 17.3 cents, or 5.3percent, to USD3.079 per million British thermal units, putting the contract on track for its lowest close since October 17.

In the cash market, average prices at the Waha Hub in the Permian Basin in West Texas remained in negative territory for an eighth day in a row and the 17th time so far this year, as pipeline constraints trapped gas in the nation’s biggest oil-producing basin.

Daily Waha prices closed below zero in 2019. They did so 17 times in 2019, six times in 2020, once in 2023, a record 49 times in 2024, and 39 times in 2025.

Waha prices have averaged USD1.25 per mmBtu so far this year, compared with USD1.15 in 2025 and a five-year average (2021-2025) of USD2.88.

Financial firm LSEG said average gas output in the Lower 48 states climbed to 108.5 billion cubic feet per day (bcfd) so far in February, up from 106.3 bcfd in January. That compares with a monthly record high of 109.7 bcfd in December.

On a daily basis, however, output was on track to ease to 109.9 bcfd on Tuesday after reaching 111.0 bcfd on Saturday, which was the most since hitting a daily record high of 111.2 bcfd on December 21.