Front-month gas futures for February delivery on the New York Mercantile Exchange (NYMEX) fell 2.0 cents, or 0.9%, to settle at $2.182 per million British thermal units (mmBtu). On Friday, the contract settled at its highest since Dec. 26.
Traders noted gas prices have dropped about 25% since hitting an eight-month high of $2.905 per mmBtu in early November due to milder-than-usual weather. There are also expectations inventories will remain over the five-year average as near-record production enables utilities to leave more gas in storage, eliminating concerns of shortages and price spikes this winter.
Lack of worry about supplies this winter caused speculators last week to boost their short positions on the NYMEX to the highest since November 2015, which increased their net shorts on the NYMEX and Intercontinental Exchange to the highest on record, according to U.S. Commodity Futures Trading Commission (CFTC) data going back to 2010.
Data provider Refinitiv projected average demand in the Lower 48 states, including exports, would jump to 138.4 billion cubic feet per day (bcfd) next week from 113.9 bcfd this week. That, however, is lower than Friday’s forecast of 140.4 bcfd for next week and 116.3 bcfd for this week.
Gas flows to liquefied natural gas (LNG) export plants held at a record high 8.8 bcfd on Sunday, the same as Saturday, according to Refinitiv data. That compares with an average of 8.2 bcfd last week.
Pipeline flows to Mexico, meanwhile, slipped to 5.0 bcfd on Sunday from 5.1 bcfd on Saturday, according to Refinitiv data. That compares with an average of 5.3 bcfd last week and an all-time daily high of 6.2 bcfd on Sept. 18.
Gas production in the Lower 48 edged up to 95.0 bcfd on Sunday from a three-week low of 94.8 bcfd on Saturday, according to Refinitiv. That compares with an average of 95.3 bcfd last week and a record high of 96.8 bcfd on Nov. 30.
Analysts said utilities likely pulled 100 billion cubic feet (bcf) of gas from storage during the week ended Jan. 10. That compares with a decline of 82 bcf during the same week last year and a five-year (2015-19) average reduction of about 184 bcf for the period.
If correct, the decrease for the week ended Jan. 10 would cut stockpiles to 3.048 trillion cubic feet (tcf), 5.5% above the five-year average of 2.890 tcf for this time of year.
In the spot market, power prices for Monday in New England fell to their lowest since July 2015 amid moderate weather and low demand.