US natural gas futures end Friday at lowest close since August on milder forecasts

Contracts for calendar 2027 fell to an almost five-year low of $3.08 per mmBtu as of Friday.

US natural gas futures ended Friday, October 23, at their lowest close since August 6. Front-month November contracts on the New York Mercantile Exchange fell 15.6 cents, or 6 per cent, to settle at $2.64 per mmBtu, a measure of heat content equal to one million British thermal units.

The contract was higher a week earlier. It fell about 4 per cent on Friday, October 16, to $3.102, after dropping 2.9 per cent on Monday, October 12, to $3.126.

On Wednesday, futures fell on forecasts of mild weather through early November. Those forecasts reduced expectations for heating demand. Strong demand from liquefied natural gas (LNG) export plants offset part of the drop. Average gas flows to the nine major US LNG export plants were 18.2 billion cubic feet per day (bcfd) so far in October as of Friday, up from 17.9 bcfd in September. The monthly record is 18.8 bcfd, set in April, Reuters reported.

Supply is close to its record. LSEG, a data provider, put Lower 48 US output at 111.5 bcfd so far in October as of Wednesday, October 21. Output reached records of 113.3 bcfd in August and September, LSEG data showed, as reported by Reuters.

Prices further out have also fallen. Calendar 2027 futures reached an almost five-year low of $3.08 per mmBtu as of Friday. The 12-month futures strip fell to a two-year low of $2.90, Reuters reported.

Higher output and milder demand forecasts are pushing natural gas prices down. The fall extends a recent downtrend and does not look like a turn in the trend. With output close to record levels and weather-driven demand expectations softening, the balance of supply and demand looks heavier than it did a few weeks ago. Unless a cold snap or a disruption to production arrives, the likeliest direction for prices is further downward pressure.