U.S. natural gas futures slipped on Wednesday but were on course for a second consecutive monthly rise, supported by above-normal temperatures, which boosted cooling demand and overall higher European gas prices.
Front-month gas futures for October delivery were down 12.1 cents, or 1.3%, to $8.92 per million British thermal units (mmBtu) by 9:47 a.m. EDT (1347 GMT).
“Early this morning, the (gas) market seems to be under a little bit of pressure, the oil market is down. We seem to be in kind of a energy risk-off mode, despite the fact that Gazprom cut off supplies to Europe through the Nord Stream 1 pipeline,” said Phil Flynn, analyst at Price Futures Group.
For the month, the contract was on track to gain about 8% after rising more than 51% in July.
However, “the above-normal temperatures are forecast to continue into early September but are then likely to cool, indicating gas power demand may start to trend lower after the warmer-than-expected summer,” Rystad Energy said in a note.
Dutch wholesale gas prices rose on a full shutdown of Russian flows to Europe via the Nord Steam 1 pipeline, while UK contracts eased following a rise of flows from Norway.
Russia halted gas supplies via Europe’s key supply route on Wednesday, intensifying an economic battle between Moscow and Brussels and raising the prospects of recession and energy rationing in some of the region’s richest countries.
Globally, gas was trading around $77 per mmBtu in Europe and $59 in Asia.
“We can still see an eventual price rebound next month back up to around the $10 level, but for now, yesterday’s chart damage and this week’s European storage guidance is keeping the longs on the defensive for a change in allowing for another test of $8.86 support,” Ritterbusch and Associates said in a note.
Investors are now looking ahead to a federal report expected to show utilities added more gas to storage than usual last week.
Meanwhile, the restart delay at the fire-hit Freeport liquefied natural gas (LNG) export plant in Texas, leaves more fuel in the United States for utilities to refill storage.