U.S. natural gas futures slid 2% to a five-month low on Friday on rising output and forecasts for mild weather through mid-May that will limit heating and cooling demand, allowing utilities to keep putting more gas than usual into storage.
On its last day as the front-month, gas futures for May delivery on the New York Mercantile Exchange fell 7.0 cents, or 2.4%, to $2.867 per million British thermal units at 8:46 a.m. EDT (1246 GMT), putting the contract on track for its lowest since November 15.
That kept the front-month in technically oversold territory for an eighth day in a row for the first time since February 2024.
The June (MGM25) contract, which will soon be the front-month, was down about 1.5% to $3.11 per mmBtu.
One factor pressuring prices in recent weeks has been fast growth in the amount of gas in storage. After falling below normal levels in mid-January, analysts project gas inventories will rise over the five-year average in the next week or two.
After cold weather in January and February boosted demand for gas, the total amount in storage was about 1% below normal for this time of year.
Looking ahead, the premium of March 2026 futures over April 2026, which the industry calls the widow maker, fell to its lowest since April 2021, while the premium of the November 2025 contract over October 2025 rose to its highest since February 2024.
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, including the Amaranth hedge fund, which lost more than $6 billion in 2006.
The industry uses the March-April and October-November spreads to bet on winter weather forecasts since March is the last month of the winter heating season when utilities pull gas out of storage and October is the last month of the summer cooling season when utilities inject gas into storage.
With gas futures down about 33% over the past seven weeks, speculators cut their net long futures and options positions on the New York Mercantile and Intercontinental exchanges for a seventh week in a row to their lowest since January, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.5 billion cubic feet per day in April from a monthly record of 106.2 bcfd in March.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 13.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 99.2 bcfd this week to 97.4 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Friday, while its forecast for next week was lower.
The average amount of gas flowing to the eight big LNG export plants operating in the U.S. has climbed from a monthly record of 15.8 bcfd in March to 16.0 bcfd so far in April on rising flows to Venture Global’s
VG
3.2-bcfd Plaquemines export plant, under construction in Louisiana.
The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading near a nine-month low of around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and at an 11-month low of around $11 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters