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U.S. natural gas futures plunged Wednesday, wiping out the previous session’s strong gain, as production continues to increase while demand declines with the coming of seasonally milder weather.
The day’s decline came even as the amount of gas flowing to liquefied natural gas export plants is on track to hit a record high, after Freeport LNG’s plant in Texas ended its eight-month outage in February.
According to Reuters, total gas flows to all seven of the major U.S. LNG export plants rose to an average of 13.1B cf/day so far in March from 12.8B cf/day in February, which would exceed the monthly record of 12.9B cf/day in March 2022, before the Freeport LNG facility shut.
Front-month Nymex natural gas (NG1:COM) for April delivery closed -7.5% to $2.171/MMBtu, its lowest since February 21, when the price hit a 29-month closing low.
In the spot market, next-day gas prices at the Henry Hub benchmark in Louisiana fell to $1.93/MMBtu, their lowest since October 2020.
ETFs: (NYSEARCA:UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)
Relatively mild winter weather so far this year has caused utilities to leave more gas in storage than usual; gas stockpiles were 24% above their five-year 2018-22 average during the week ended March 10.
Analysts at energy consultant Ritterbusch and Associates said this week that they “still see significant price support further down the curve with Europe likely to be a strong buyer later in the summer.”
