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U.S. natural gas futures fell to a fresh two-month low Tuesday following forecasts for less cold weather and thus reduced heating demand over the next two weeks than previously expected.
A cold snap across much of the U.S. favors demand for the next day or two, but milder conditions are forecast later in the week, according to NatGasWeather.com, which said it would “continue to give bears the benefit of the doubt they’re in control as long as they hold Jan 2024 under $3.”
On its last day as the front-month contract, December Nymex natural gas (NG1:COM) closed -3.1% to $2.706/MMBtu, its lowest settlement value since September 26; the price has slid 24% so far this month and 39% YTD.
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One bearish factor that has weighed on the U.S. natgas futures market for most of this year has been lower spot or next-day prices at the Henry Hub benchmark in Louisiana, according to Reuters.
Data from financial firm LSEG shows spot market has traded below front-month futures for 189 out of 226 trading days so far in 2023.
With less cold weather expected, LSEG also forecast U.S. gas demand in the Lower 48 states including exports would drop from 127.3B cf/day this week to 118.9B cf/day next week.
