Natural Gas Futures Hit Four-Year Low
On Tuesday, U.S. natural gas futures experienced a significant decline, sinking to their lowest levels in nearly four years. This dip was spurred by forecasts predicting milder weather over the next two weeks, alongside an abundance of gas reserves in storage.
Factors Impacting Prices
The subdued flow of gas to U.S. liquefied natural gas export facilities, primarily due to ongoing maintenance work at Freeport LNG’s Texas export plant anticipated to continue until May, has exerted downward pressure on prices. This scenario has been exacerbated by the overabundance of gas supply in storage.
Market Performance and Outlook
The front-month Nymex natural gas contract for April delivery registered a decrease of 2.5%, closing at $1.575/MMBtu after hitting a low of $1.481/MMBtu. This marks the fifth consecutive loss for natural gas futures and represents the lowest settlement value since June 2020, with a year-to-date decline of 37%. Despite the decline in the April contract, future prices for May, set to become the front-month, remained relatively stable at around $1.79/MMBtu.
Expert Analysis
Analysts at energy consultancy firm EBW Analytics anticipate a reduction in weather-driven demand for natural gas in the coming weeks. They suggest that with fluctuating LNG feedgas demand and the onset of the low-demand shoulder season, the prevailing weakness in natural gas prices may persist. Although some cold weather in early April could potentially boost demand, the delayed resumption of full LNG feedgas supply until mid-May is looming over the market, as noted by Tradition Energy’s director of market research, Gary Cunningham.