US natural gas futures drop 6% on less cold forecasts, near-record output

By Scott DiSavino

NEW YORK, Dec 8 (Reuters) - U.S. natural gas futures fell about 6% on Monday on forecasts for less cold weather over the next two weeks than previously expected, near-record output, ample amounts of gas in storage and lower prices around the world.

Front-month gas futures for January delivery NGc1 on the New York Mercantile Exchange fell 30.2 cents, or 5.7%, to $4.987 per million British thermal units (mmBtu) at 9:19 a.m. EST (1419 GMT). On Friday, the contract closed at its highest since December 21, 2022.

That price drop, which pushed the front-month out of technically overbought territory for the first time in four days, came despite near-record gas flows to liquefied natural gas (LNG) export plants and forecasts for more demand over the next two weeks than previously expected.

In the cash market, extreme cold over the past week caused next-day gas prices to soar to their highest since February 2023 in New England NG-CG-BS-SNL, their highest since January 2025 in California NG-SCL-CGT-SNL, NG-CG-PGE-SNL, and their highest since February 2025 at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana and in Pennsylvania NG-PCN-APP-SNL, Chicago NG-CG-CH-SNL, New York NG-CG-NY-SNL and Alberta NG-ASH-ALB-SNL in Canada.

Next-day electricity prices in New England E-NEPLMHP-IDX, where more than half the power comes from gas-fired plants, rose to their highest since January 2025.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states rose to 109.7 billion cubic feet per day (bcfd) so far in December, up from a monthly record high of 109.6 bcfd in November.

Record output has allowed energy companies to stockpile more gas than usual, leaving the amount of fuel in storage at about 5% above normal for this time of year. EIA/GAS NGAS/POLL

Meteorologists forecast weather across the country would remain mostly near normal through December 23.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 143.8 bcfd this week to 146.0 bcfd next week. Those forecasts were higher than LSEG's outlook on Friday.

Average gas flows to the eight large LNG export plants in the U.S. rose to 18.9 bcfd so far this month, up from a monthly record high of 18.2 bcfd in November.

In LNG news, the Imsaikah LNG vessel remained anchored near Exxon Mobil XOM.N/QatarEnergy's 2.4 bcfd Golden Pass LNG export plant under construction in Texas, according to LSEG data and analyst comments.

The ship is carrying LNG from Qatar that traders and analysts say will be used to cool equipment as part of the commissioning of the plant. The facility is expected to start producing LNG later this year or early next year.

Around the world, gas prices were trading around 19-month lows near $9 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and $11 at the Japan-Korea Marker (JKM) JKMc1 in Asia.

Global prices have declined in recent weeks with a slow start to winter heating demand and hopes that peace talks over Ukraine could result in the lifting of sanctions against Moscow. That could allow Russia, the world's second-biggest gas producer behind the U.S., to export more fuel in the future. NG/EU