U.S. natural gas prices fell by over 1% on Tuesday, primarily due to increasing production and predictions of milder weather. This trend tempered the expectation for higher demand for the coming week and record-level flows to liquefied natural gas (LNG) export facilities. As of 9:58 a.m. EDT, front-month gas futures for April delivery on the New York Mercantile Exchange had decreased by 5.7 cents, or 1.3%, reaching $4.433 per million British thermal units (mmBtu). Prices had momentarily hit their highest since December 2022 just the day before.
Analysts from energy advisory firm Ritterbusch and Associates noted that the significance of weather variables is diminishing, given the near-record temperatures anticipated in key consuming regions. This shift will likely lead to a further decrease in heating degree days (HDD), which typically pressure prices downward. LSEG estimated there would be 213 HDD in the Lower 48 states over the next two weeks, a reduction from 221 HDDs previously forecasted, while the norm for this time of year stands at 278 HDDs. According to meteorologists, temperatures throughout the Lower 48 states are projected to remain above normal until March 15.
Despite the overall increase in natural gas output—averaging 105.7 billion cubic feet per day (bcfd) this March, compared to a record 105.1 bcfd in February—LSEG predicted that average gas demand, including exports, will rise from 110.4 bcfd this week to 113.3 bcfd next week, indicating increased short-term demand. Conversely, Dutch and British wholesale gas prices increased due to a drop in Norwegian exports and higher demand. Additionally, Canadian gas exports to the U.S. have seen a decline since tariffs were imposed by the U.S. on Canadian goods earlier this month.