US Natural Gas Falls to Five-Month Low as Forecasts Shift Warmer

By Julian Hast

US natural gas futures settled down in thin trading, closing to the lowest in about five months as forecasts shifted warmer, indicating lower demand for the heating and power-plant fuel.

Traders were also pricing in an increasingly low probability of an unexpected cold snap draining supplies as the winter heating season draws to a close. High production levels and above-normal temperatures are expected to flip the current modest storage deficit to a surplus in the coming weeks.

“Even if we get a cold shot, we have really run out of a winter fairway for this to jump higher,” said Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets.

• Futures for March delivery settled -7c, or -2.4%, to $2.915/mmbtu on Nymex
  • Lowest front-month settlement since Sept. 26
  • Prices for the more actively traded April contract closed -9c, or -3.1%, to $2.831/mmbtu
• March futures expire on Feb. 25

Weather:

• Forecasts shifted warmer, with above-normal temperatures expected across the western half of the US through the end of the month: Commodity Weather Group
  • Midday outlooks also trended warmer: Xweather

Daily BNEF Gas Data:

• Lower-48 dry gas production on Tuesday ~113.3 bcf/day, or +8.8% y/y
• Lower-48 total gas demand on Tuesday ~101.3 bcf/day, or +14.2% y/y
• Dry gas exports to Mexico on Tuesday ~6.7 bcf/day, or -2.6% w/w
• Estimated gas flows to LNG export terminals on Tuesday ~19.8 bcf/day, or +1.0% w/w

Gas Market News:

• European Gas Prices Slip Further as Mild Weather Takes Hold
• LNG WRAP: Japan’s Hot Summer Outlook May Boost Fuel Purchases
• Mainland China LNG Imports Drop 66% Week-On-Week: BNEF Chart
• Natural Gas Deliveries to US LNG Export Terminals: BNEF

This story was produced with the assistance of Bloomberg Automation.

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