NEW YORK: US natural gas futures slipped 2% to a near one-week low on Monday as weather forecasts suggested less cold conditions in the coming weeks, which is expected to lower heating demand
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 6.6 cents, or 2%, to $3.21 per million British thermal units (mmBtu) by 9:16 a.m. EST (1416 GMT).
“Natgas is pulling back as the US is seeing a warm up and disagreements from weather models on how cold January is going to be,” said Phil Flynn, an analyst at Price Futures Group.
LSEG estimated 323 heating degree days over the next two weeks, lower than the forecast for 376 HDDs on Friday. It also forecast average gas demand in the Lower 48, including exports, dropping from 129.8 bcfd last week to 125.0 bcfd this week.
Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Dec. 28, except for a few colder-than-normal days from Dec. 21-23.
“We saw a pretty big increase in wind output and that has ultimately displaced some natural gas and coal generation, so power burns are adjusting on a week-over-week basis, which is a good indication that demand is waning in the short term,” said Robert DiDona, president of Energy Ventures Analysis.
“If we start to see a reversal of the near-term bearishness towards a bullish forecast of cold for early January, we could see prices find some clear bid support if not rise. However, if we don’t get that weather model trending back towards a bullish nature there, we’re going to find that we’ll be testing $3 support once again.”
Financial firm LSEG said average gas output in the Lower 48 US states rose to 103.0 billion cubic feet per day (bcfd) so far in December, up from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
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