US natural gas prices fall 3pc with contract expiration, drop in oil futures

NEW YORK: US natural gas futures fell about 3% on Friday in low-volume, volatile trading with the expiration of a contract, ample amounts of gas in storage and a roughly 4% drop in oil futures.

On their last day as the front month, gas futures for July delivery on the New York Mercantile Exchange fell 11.2 cents, or 3.4%, to settle at $3.231 per million British thermal units. On Thursday, the contract closed at its highest since February 6.

Earlier in the session, prices were on track to close at a 20-week high on increased flows to liquefied natural gas export plants and forecasts for hotter weather in the coming weeks that should boost power demand for air conditioning.

The August contract, which will soon be the front month, eased to $3.28 per mmBtu.

For the week, the front month was mostly flat after gaining around 4% last week.

SUPPLY AND DEMAND

Financial group LSEG said average gas output in the U.S. Lower 48 states held at 109.7 billion cubic feet per day so far in June, the same as May. That compares with a monthly record high of 110.6 bcfd in December 2025.

Analysts said mostly mild weather during the spring allowed energy firms to stockpile more gas than usual.

They projected the amount of gas in inventories would edge up to 5.9% above normal during the week ended June 26, up from 5.7% above in the previous week.

Meteorologists forecast the weather will remain mostly warmer than normal through July 11, which should boost the amount of gas power generators burn to keep air conditioners humming. About 40% of U.S. power generation comes from gas-fired plants.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 102.8 bcfd this week to 105.5 bcfd next week and 108.6 bcfd in two weeks. The forecasts for this week and next were similar to LSEG’s outlook on Thursday.

Average gas flows to the nine big U.S. LNG export plants rose from 17.1 bcfd in May to 17.3 bcfd so far in June due in part to record feedgas at QatarEnergy/ExxonMobil’s Golden Pass plant in service and under construction in Texas.

That compares with a monthly record high of 18.8 bcfd in April.