U.S. natural gas futures fell more than 5% on Thursday from a near two-year high in holiday-thinned trade as forecasts for less cold conditions in the short term overshadowed support from a rise in the amount of gas flowing to liquefied natural gas (LNG) export plants.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 20.2 cents, or 5.1%, to $3.74 per million British thermal units (mmBtu) at 8:59 a.m. EST (1318 GMT) after hitting their highest level since January 2023 earlier in the session.
“This morning we’re pulling back, mainly because there is some doubt as to how cold January will be and we are definitely going to see a bit of a warm-up at the start of the year,” said Phil Flynn, an analyst at Price Futures Group.
Financial firm LSEG forecast 393 heating degree days over the next two weeks, lower than the 10-year normal of 427 HDDs and 30-year normal of 432 HDDs.
It also forecast average gas demand in the Lower 48, including exports, falling to 119.8 bcfd next week from 132.9 bcfd this week.
The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 14.8 bcfd so far in December from 13.6 bcfd in November. That compares with a monthly record high of 14.7 bcfd in December 2023.
LSEG said average gas output in the Lower 48 U.S. states rose to 103.1 billion cubic feet per day (bcfd) so far in December from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
Elsewhere, Alexei Miller, the head of Russia’s Gazprom, said the group’s natural gas production is set to rise this year by 61 billion cubic metres (bcm) to around 416 bcm.
(Reporting by Anmol Choubey and Anjana Anil in Bengaluru; Editing by Mark Porter)