NEW YORK: US natural gas futures slid about 2percent to a two-week low on Wednesday on record output, ample amounts of gas in storage and forecasts for less demand this week than previously expected.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 7.1 cents, or 2.4percent, to USD2.845 per million British thermal units, putting the contract on track for its lowest close since August 26.
Financial firm LSEG said average gas output in the US Lower 48 states has risen to 113.5 billion cubic feet per day (bcfd) so far in September, up from a monthly record high of 112.2 bcfd in August.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory higher than the five-year (2021-2025) average since March.
But with hot weather last week, analysts said the amount of gas in storage likely eased to 4.3percent above normal during the week ended September 4, down from 5.3percent above normal in the previous week, according to estimates ahead of the weekly federal inventory report on Thursday.
The weather is still hot this week — especially in the Western US — where spot power prices at the South Path-15 Hub (SP-15) in Southern California have soared by around 82percent to USD84 per megawatt-hour, their highest price since July 2024, as consumers cranked up their air conditioners.
That figure compares with average SP-15 prices of USD22 so far in 2026, USD28 in 2025 and USD53 over the past five years (2021-2025).
HOT WEATHER TO CONTINUE
Meteorologists forecast the weather will remain mostly warmer than normal through September 24, pushing power generators to continue burning more gas than usual to keep air conditioners running. About 40percent of US power generation comes from gas-fired plants.
LSEG projected average gas demand in the Lower 48 states, including exports, would slide from 111.1 bcfd this week to 109.1 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Tuesday.
Average gas flows to the nine big US LNG export plants have risen to 18.3 bcfd so far in September, up from 17.2 bcfd in August but still short of the monthly record high of 18.8 bcfd in April.
The US became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more low-cost US gas.
Around the world, gas traded near 44-month highs of around USD27 per mmBtu at the Dutch Title Transfer Facility benchmark in Europe and USD24 at the Japan-Korea Marker benchmark in Asia.
Global gas prices have spiked in recent years primarily due to supply disruptions linked to Russia’s invasion of Ukraine in 2022 and the US-Israeli war with Iran this year.
Prices in the US, however, have not reacted much to the war in Iran because the US produces all the gas it consumes domestically and US LNG companies are already liquefying as much fuel as they can.
No matter how high global gas prices go, the US cannot export much more LNG until units under construction enter service in coming months and years.