NEW YORK: US natural gas futures eased about 2% to a three-week low on Wednesday on forecasts for milder weather and lower heating demand over the next two weeks than previously expected. On its last day as the front-month, gas futures for February delivery on the New York Mercantile Exchange fell 5.3 cents, or 1.5%, to $3.418 per million British thermal units (mmBtu) at 7:50 a.m. EST (1250 GMT), putting the contract on track for its lowest close since Jan. 3.
That also put the front-month down for a third day in a row for the first time since October. Futures for March, which will soon be the front-month, were trading around $3.11 per mmBtu, which would be the lowest close since early December if that price holds for the rest of the day.
Financial firm LSEG said average gas output in the Lower 48 US states fell from 103.8 billion cubic feet per day (bcfd) in December to 102.2 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 on track to be back in service on Wednesday.
Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Feb. 13.
With milder weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, would fall from 136.8 bcfd this week to 126.0 bcfd next week. Those forecasts were lower than LSEG’s outlook on Tuesday.
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 US LNG export plants rose to an average of 14.6 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 US 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 14-month high of around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $14 at the Japan Korea Marker (JKM) benchmark in Asia.