US natural gas futures fell more than two per cent on Tuesday to hit a more than two-week low, weighed down by forecasts for milder weather and lower demand in the coming days.
Front-month gas futures for November delivery on the New York Mercantile Exchange fell seven cents, or 2.2 per cent, to $3.05 per million British thermal units (mmBtu), hitting their lowest level since September 26.
“Natural gas prices continue to come under pressure as the late-season heat, which is currently providing elevated power sector demands in the central US, is expected to soften and shift more bearish as it migrates north,” said Gary Cunningham, Director of Market Research at Tradition Energy.
Meteorologists forecast the weather will remain mostly warmer than normal through October 28.
Financial firm LSEG projected average gas demand in the Lower 48 states, including exports, would drop from 100.7 bcfd last week to 99.5 bcfd this week. LSEG said average gas output in the Lower 48 states stood at 106.5 billion cubic feet per day (bcfd) so far in October, down from 107.4 bcfd in September and a record monthly high of 108.3 bcfd in August.
“For the day, look for the November contract to find support around $3.03 and any rally back to be limited by resistance at $3.13,” Cunningham added.
Gas pricing will continue to be driven more by the weather than by daily shifts in fundamentals such as production and exports, analysts at energy advisory firm Ritterbusch and Associates said in a note. With the shoulder period soon approaching, the weather factor will be further diminished, likely narrowing weekly price ranges, they added.
Meanwhile, Shell has approved the development of an offshore gas project in Nigeria along with its joint venture partner Sunlink Energies, the oil major said on Tuesday — the latest in a series of investments by its Nigerian business.
Elsewhere, Dutch and British gas contracts were little changed on Tuesday morning after falling for four consecutive days, as a rise in demand amid less windy and chillier weather this week was tempered by rising imports of liquefied natural gas.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Sharon Singleton)
