US natural gas futures fell on Wednesday as higher production and forecasts for milder weather that are expected to reduce cooling demand weighed on prices.
Front-month gas futures for September delivery on the New York Mercantile Exchange were down 10.3 cents, or 3.3 per cent, to $3.04 per million British thermal units at 09:39 EDT, after hitting its highest level since July 23 earlier in the session.
"It appears that the market is showing at least for now an ample supply," said Thomas Saal, senior vice president for energy at StoneX Financial. LSEG said average gas output in the Lower 48 has risen to 107.5 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.
With the market now trading September futures, prices are drifting slightly lower as September is typically associated with milder weather compared to August, Saal added.
Financial firm LSEG forecast average gas demand in the Lower 48, including exports, falling from 113 bcfd this week to 108 bcfd next week. It also estimated 235 cooling degree days over the next two weeks, down from 239 estimated on Monday. CDDs, used to estimate demand to cool homes and businesses, measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18.3 degrees Celsius).
Meanwhile, Shell-led LNG Canada is experiencing technical problems as it ramps up production at its liquefied natural gas plant at Kitimat, British Columbia, with one LNG tanker diverting away from the facility without the superchilled fuel in recent days, according to four sources and LSEG ship tracking data.
Elsewhere, Dutch and British wholesale gas contracts were largely steady after some initial gains, amid an unchanged short-term outlook but risks of increased competition for liquefied natural gas (LNG) could be a concern.
(Reporting by Anushree Mukherjee in Bengaluru, Editing by Nick Zieminski)