Analysts forecast there was around 8.7% more gas in storage than usual for this time of year.
Still, record amounts of gas flowed to liquefied natural gas (LNG) export plants and forecasts were lifted for gas demand this week.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 4.5 cents, or 1.8%, to settle at $2.447 per million British thermal units (mmBtu).
A lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 45.3%, the lowest since September 2021 for a second day in a row.
Historic daily volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. Historic volatility has averaged 71.0% so far this year, versus a record high of 92.8% in 2022 and a five-year (2018-2022) average of 57.9%.
Record production and ample gas in storage has weighed on futures prices for weeks, prompting some traders to forecast that prices this winter (November-March) have already peaked in November.
Looking ahead, analysts project U.S. gas prices and demand will rise in coming years as new LNG export plants enter service in the U.S., Canada and Mexico to meet rising global usage of the fuel.
But expected delays at Exxon Mobil /QatarEnergy’s Golden Pass LNG export plant in Texas and Venture Global LNG’s Plaquemines in Louisiana have caused some analysts to reduce their forecasts for U.S. gas demand and prices in 2024.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states rose to 108.6 billion cubic feet per day (bcfd) so far in December from a record 108.3 bcfd in November.
Meteorologists projected the weather would remain warmer than normal through Jan. 1 before turning near normal from Jan. 2-4.
LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would drop from 126.0 bcfd this week to 120.4 bcfd next week when many businesses and government offices shut for the Christmas holiday.
The forecast for this week was higher than LSEG’s outlook on Tuesday, while its forecast for next week was lower.
U.S. pipeline exports to Mexico fell to an average of 3.9 bcfd so far in December, down from 5.6 bcfd in November and a record 7.0 bcfd in August.
Analysts, however, expect exports to Mexico to rise in coming months once U.S. energy company New Fortress Energy’s plant in Altamira starts pulling in U.S. gas to turn into LNG for export in December.
Gas flows to the seven big U.S. LNG export plants rose to an average of 14.7 bcfd so far in December, up from a record 14.3 bcfd in November.
(Reporting by Scott DiSavino Editing by Bernadette Baum and David Gregorio)