U.S. natural gas futures slid about 2% to a 10-week low on Friday on rising output and forecasts for milder weather and lower heating demand over the next two weeks than previously expected.

Front-month gas futures
NG1!
for March delivery on the New York Mercantile Exchange fell 4.8 cents, or 1.6%, to $2.999 per million British thermal units (mmBtu) at 8:59 a.m. EST (1359 GMT), putting the contract on track for its lowest close since Nov. 19.

That kept the front-month in technically oversold territory for a second day in a row for the first time since October 2024.

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell from 103.8 billion cubic feet per day (bcfd) in December to 102.5 bcfd so far in January, due mostly to freezing oil and gas wells and pipes, known as freeze-offs. That compares with a monthly record of 104.6 bcfd in December 2023.

Freeze-offs from Jan. 18-21 cut output by 6.9 bcfd to a one-year low of 96.9 bcfd on Jan. 21. All of that curtailed output was back in service by Jan. 28.

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 2022, according to federal energy data.

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Feb. 15, with some near normal days around Feb. 8-11.

LSEG forecasts average gas demand in the Lower 48 states, including exports, would fall from 136.4 bcfd this week to 123.8 bcfd next week before rising to 132.8 bcfd in two weeks. The forecasts for this week and next were lower than LSEG’s outlook on Thursday.

On a daily basis, LSEG said total gas use during last week’s extreme cold peaked at 173.3 bcfd on Jan. 20 and 181.2 bcfd on Jan. 21, easily topping the prior daily record high of 168.4 bcfd on Jan. 16, 2024.

The amount of gas flowing to the eight big U.S. liquefied natural gas (LNG) export plants rose to an average of 14.5 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 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 invasion of Ukraine in February 2022.

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