NEW YORK: US natural gas futures slid about 3% on Wednesday on rising output and forecasts for less hot weather and lower gas demand next week than previously expected.
That price decline came despite forecasts for record-breaking heat later this week that could boost the amount of gas power generators burn to an all-time high.
Front-month gas futures for September delivery on the New York Mercantile Exchange fell 5.4 cents, or 2.5%, to $2.072 per million British thermal units (mmBtu) at 9:17 a.m. EDT (1317 GMT).
For the month, the contract was down about 20% after gaining about 48% during the prior three months.
In the spot market, gas prices at the Waha hub in the West Texas Permian Shale turned negative for a third time in July, even as a record-breaking heat wave could boost US power demand to an all-time high as homes and businesses crank up their air conditioners.
In the Pennsylvania-New Jersey-Maryland region, meanwhile, next-day power at the PJM West hub fell to $14 per megawatt hour, its lowest since April 2021.
Analysts said higher gas use by power generators could cause utilities to take the unusual step of pulling gas out of storage during the second week of August. That would be the first weekly storage withdrawal in August since 2006.
There was currently about 17% more gas in storage than normal for this time of year.
Storage builds have been mostly smaller than usual in recent weeks, because several producers cut output earlier this year after futures prices dropped to 3-1/2-year lows in February and March.
Higher prices in April and May, however, prompted some drillers, including EQT and Chesapeake Energy, to slowly boost output.
But with prices down about 20% so far in July, some analysts think producers could decide to keep their drilling activities on hold for longer.
Comments
Comments are closed.