U.S. natural gas futures on Friday slipped to a 10-month low on forecasts for warmer weather, yet the year’s hot-commodity was poised for its third consecutive annual rise as supply disruptions due to Russia-Ukraine war sent tremors across global gas markets. The contract has added about 20% so far in what has been tipped as the most volatile year for the commodity, having surpassed the $10 per million British thermal units (mmBtu) level for the first time in 14 years.
Prices halved since the, however, and are trading around $4.390/mmBtu, down 17 cents, or 3.8% as of 10:39 a.m. EDT, pressured by record high U.S. output and milder weather reducing demand for heating. The contract hit its lowest since March 1 and was on track for the worst quarterly loss in a year.
“With warmer than normal weather ahead of us, I believe the draws for the next several weeks are going to be much lower than the five year average, especially for the first week of January,” said Zhen Zhu, managing consultant at C.H. Guernsey and Co in Oklahoma City, who expects prices to continue to be soft unless there is “some serious cold.”
Data provider Refinitiv estimated 345 heating degree days (HDDs) over the next two weeks in the lower 48 U.S. states. The normal is 440 HDDs for this time of year.
HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius).
Markets now keenly wait for the restart of long-shut Freeport LNG liquefied natural gas export plant in Texas, in the second half of January, pending regulatory approval.