NEW YORK: US natural gas futures retreated on Tuesday as traders booked profits, though the market recorded its biggest annual jump since 2021 fueled by an increase in gas flowing to liquefied natural gas (LNG) export plants on rising overseas demand.
Front-month gas futures for February delivery on the New York Mercantile Exchange settled 30.1 cents lower, or down 7.7%, at $3.633 per million British thermal units as of 02:42 p.m. EST, as traders took profits after prices surged on Monday to their highest since January 2023.
“Gas prices yesterday jumped up on the revised and colder January weather forecast during the weekend, and the decline now is, I believe, a correction from the sharp increases, the magnitude of which may not be fully justified by the prolific gas production in the last a few months,” said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.
Financial firm LSEG estimated 492 heating degree days over the next two weeks, compared with 499 estimated on Monday. It also forecast average gas demand in the Lower 48, including exports, jumping from 118.9 bcfd this week to 144.4 bcfd next week.
LSEG said average gas output in the Lower 48 US states rose to 103.3 bcfd so far in December, from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
“Gas prices still have room to head higher in the short to medium terms due to potentially substantial increase in demand in January and February and the possible wellhead freeze offs. No matter what happens, winter weather uncertainty will continue to bring volatilities to gas prices in the next couple of months especially in January,” Zhu added.
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