US natural gas futures ease on oversupply concerns after hitting nearly 3-year high
SEATTLE (Oil Monster): U.S. natural gas futures fell on Tuesday as supply concerns pressured the market, overshadowing earlier gains from forecasts for colder weather and stronger demand.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 3.6 cents, or 0.7%, to $4.89 per million British thermal units (mmBtu), after hitting their highest level since December 2022 for a third day in a row.
That move also kept the front-month in technically overbought territory briefly for a third day in a row for the first time since mid-November.
"The market may be at least supply-wise saturated, so you got a little bit of a pullback here. But we'll see if this cold weather continues," said Thomas Saal, senior vice president for energy trading at StoneX Financial.
Prices were pressured due to record output, ample amounts of gas in storage and lower gas prices around the world due mostly to the Ukraine peace talks.
Despite ample supply, strong demand helped U.S. natural gas prices to gain 17.6% in November. They are up 0.4% so far this month.
"Weather remains as the primary price driver and while current cold temperatures are expected to begin moderating next week, trends across the northeast quadrant are expected to remain below normal when looking out beyond the middle of this month," consultancy Ritterbusch & Associates said in a note.
SUPPLY AND DEMAND
LSEG said average gas output in the Lower 48 states rose to a record 109.6 billion cubic feet per day (bcfd) in November, up from 107.0 bcfd in October and the prior all-time monthly high of 108.0 bcfd in August.
Record output this year has allowed energy companies to stockpile more gas than usual, leaving about 5% more gas in storage than normal for this time of year.
LSEG projected average gas demand in the Lower 48 states, including exports, would fall slightly from 142.0 bcfd this week to 140.5 bcfd next week. Those forecasts were higher than LSEG's outlook on Friday.
Average gas flows to the eight big LNG export plants operating in the U.S. rose to a record 18.3 bcfd in November, topping the prior all-time monthly high of 16.6 bcfd in October.
Europe's benchmark gas contract extended a nine-day losing streak on plentiful liquefied natural gas (LNG) supply and muted demand from warmer-than-normal weather, curbing risks typically associated with the winter heating season.
Elsewhere, Ukraine's state oil and gas firm Naftogaz said that Russian forces had attacked its gas production and storage facilities late on Monday and early on Tuesday.
Courtesy: www.tradingview.com