U.S. natural gas futures slid about 2% on Wednesday on forecasts for milder weather and less demand for the fuel this week than previously expected.

That price decline occurred despite forecasts for more demand next week than previously expected.

Front-month gas futures
NG1!
for March delivery on the New York Mercantile Exchange fell 5.2 cents, or 1.6%, to $3.201 per million British thermal units (mmBtu) at 8:11 a.m. EST (1311 GMT).

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 106.0 bcfd so far in February, up from 102.7 bcfd in January when freezing oil and gas wells and pipes, known as freeze-offs, cut production, according to LSEG data. That compares with a monthly record of 104.6 bcfd in December 2023.

On a daily basis, however, output was on track to fall by around 1.3 bcfd over the past five days to a preliminary one-week low of 105.3 bcfd on Wednesday, down from a daily record high of 106.5 bcfd on Jan. 31. The prior all-time high was 106.4 bcfd in January of 2024.

After extreme cold last week boosted heating demand to a record high, analysts said energy firms may have pulled a record amount of gas out of storage this month. The current record monthly storage withdrawal is 994 billion cubic feet in January of 2022, according to federal energy data.

Meteorologists projected weather in the Lower 48 states would switch from warmer than normal from Feb. 5-8 to mostly colder than normal from Feb. 9-14 and mostly near normal from Feb. 15-20.

With colder weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, will rise from 123.1 bcfd this week to 134.1 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Tuesday, while its forecast for next week was higher.

The amount of gas flowing to the eight big U.S. LNG export plants has risen to an average of 15.0 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December of 2023.

The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed 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 15-month high of around $16 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe. In Asia, meanwhile, gas was trading around $14 at the Japan Korea Marker (JKM) (JKMc1) benchmark.
Source: Reuters