Houston — The NYMEX November gas futures contract dropped 4.8 cents and settled at $3.008/MMBtu Friday as power burn demand continued to decline steadily due to cooler temperatures.
The front-month contract traded between $2.977/MMBtu and $3.062/MMBtu in the session.
US power burn steadily declined over the past three days and is estimated to drop 1.9 Bcf day on day to 28.6 Bcf Friday, according to S&P Global Platts Analytics. If realized, this could be the lowest power burn level since June 6, when power burn stood at 28.5 Bcf, the data showed. Much of this ongoing decline is likely due to demand drops expected in the Southeast, Northeast and Upper Midwest regions.
Platts Analytics projects power burn to inch up to average 29.5 Bcf/d over the next two weeks.
"Weather patterns are neutral across the country and offset each other," said John Woods, president of JJ Woods Associates.
The National Weather Service calls for a likelihood of temperatures below seasonal norms in the North and the West, while higher-than-average temperatures are expected across the rest of the US over the next six to 10 days.
Looking ahead, November temperatures are forecast to be above seasonal norms, likely keeping demand suppressed.
Friday's price movements also reflect some "end-of-the-week profit-taking," Woods said.
"The market is positioning itself to take advantage of the winter season. Anything below $3/MMBtu is a good opportunity to re-establish long positions," he said.
On the supply side, dry gas production is likely to drop 1 Bcf and stand at 82.8 Bcf Friday, Platts Analytics data showed. Despite the day-on-day drop, production continues to steam ahead at elevated levels. Month to date, production has averaged 83 Bcf/d, up nearly 10 Bcf from the year-ago levels of 73.6 Bcf/d.
Platts Analytics estimates production to hold over the next two weeks and average 83.1 Bcf/d.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
