The NYMEX May natural gas futures contract settled at $2.683/MMBtu, down 5 cents, amid record production following the extended holiday weekend.
The price fall in the front-month contract comes as continued strong production, a mixed weather outlook and sinking demand have weighed heavily on prices.
Production has continued to be robust throughout March, as dry gas output has averaged 78.3 Bcf/d over the last three calendar days, up 400 MMcf/d from 77.9 Bcf/d averaged over March, Platts Analytics data shows. US dry production levels reached a new all-time high at 78.4 Bcf/d levels seen the week ended Friday.
In tandem with rising production placing pressure on prices, US Energy Information Administration data, released Thursday, shows current US gas storage levels currently sit at a 20% deficit to the five-year average, although the market appears to be unfazed by the bullish number with the shoulder season quickly approaching.
The most recent six- to 10-day weather outlook from the National Weather Service calls for colder-than-average weather in the Northeast and Midwest, while the same outlook calls for warmer-than-average weather in the Northwest, Southwest and parts of the Southeast and Texas.
US demand has taken a sizable dip over the extended weekend, as over the last three days, demand has averaged only 74 Bcf/d, falling 9.2 Bcf/d from the 83.2 Bcf/d averaged over March, according to S&P Global Platts Analytics.
Looking ahead, recent production and demand trends may subside from weekend levels in the coming week, potentially alleviating some pressure on prices in the short term. According to Platts Analytics, US demand in the next seven-day period is expected to average 75.9 Bcf/d and dry production is expected to average 77.8 Bcf/d.
But this slight reversal may be short-lived, as Platts Analytics expects US demand levels over the next eight- to 14-day period to fall to 68.4 Bcf/d and dry production to push upward to 77.9 Bcf/d.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
