NEW YORK: US natural gas futures slid about 2percent to nearly a three-month low on Tuesday on record output and forecasts for cooler weather and lower demand over the next two weeks than previously expected.
Prices were also depressed by lower flows to liquefied natural gas (LNG) export plants and ample amounts of gas in storage.
On its second-to-last day as the front-month, gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 4.6 cents, or 1.7percent, to USD2.721 per million British thermal units (mmBtu), putting the contract on track for its lowest close since April 29.
That move kept the front-month in technically oversold territory for a second day in a row for the first time since mid-July.
Futures for September, which will soon be the front-month contract, were down about 2percent at USD2.74 per mmBtu.
In a sign that the market is not too worried about gas supplies this winter, the premium of futures for March over April 2027 fell to a record low of around 15 cents per mmBtu.
Analysts have said March, the last month of the peak winter heating season when utilities need to pull gas out of storage to meet demand, should never trade below April, the first month of the summer air conditioning season when energy firms produce enough gas to meet demand and inject fuel into storage.
The industry calls the March-April spread the “widow-maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business. Notably, the Amaranth hedge fund lost more than USD6 billion in 2006.
Financial firm LSEG said average gas output in the US Lower 48 states has risen to 110.6 billion cubic feet per day (bcfd) so far in July, up from 110.0 bcfd in June, putting production in line with the monthly record high of 110.6 bcfd in December 2025. Analysts said gas inventories have remained higher than the five-year (2021-2025) average since the spring when the weather was mild, allowing energy firms to stockpile more gas than usual.
As they wait for a federal report on Thursday, analysts projected the amount of gas in storage likely rose to 6.6percent above normal during the week ended July 24, up from 6.4percent above normal during the previous week.