NEW YORK: US natural gas futures eased on Thursday following a rise in oil prices this week that will likely result in more associated gas output in coming months. That decline came despite forecasts for cooler weather and higher heating demand over the next two weeks and record liquefied natural gas exports.
Front-month gas futures fell 1.7 cents, or 0.6%, to $3.014 per million British thermal units at 8:32 a.m. EST (1332 GMT). Traders noted the 12% rise in US oil prices this week on hopes energy demand and economic activity will increase now that a promising coronavirus vaccine is in the works and boost US oil production. That would likely increase the amount of associated gas produced from oil wells and depress gas prices since oil drillers would keep pulling oil (and gas) out of the ground so long as global oil prices were high enough.
Data provider Refinitiv said output in the Lower 48 US states has averaged 88.8 billion cubic feet per day (bcfd) so far in November, up from a five-month low of 87.4 bcfd in October. As the weather turns seasonally cooler, Refinitiv projected demand, including exports, would jump from 92.1 bcfd this week to 104.6 bcfd next week.
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