Natural Gas Dropped With Growing, Near-Record Production

Natural gas saw pressure from below, ultimately settling at 133.6, down -1.11% from the previous week’s close amid record output and a lower-than-anticipated storage depletion. Warmer-than-normal weather that reduced demand for heating caused U.S. utilities to withdraw 49 billion cubic feet of natural gas from storage during the week ending February 9, 2024, falling short of market forecasts for a 67 bcf draw.

This is in contrast to a five-year average reduction of 119 bcf for this time of year and a more significant decrease of 117 bcf during the same week last year. Stockpiles were reduced from a five-year average of 2.535 trillion cubic feet (tcf) to 2.535 trillion bcf, which is 255 bcf more than the previous year.

According to a financial firm called LSEG, gas output in the U.S. Lower 48 states increased to an average of 105.8 billion cubic feet per day (bcfd) in February from 102.1 bcfd in January. Despite this increase, gas output was still below the monthly record high of 106.3 bcfd in December.

Despite these considerations, through March 1st, most of the Lower 48 states should see warmer-than-normal weather; however, the following week should see a modest cooling off. With a 2.9% decline in open interest and a settlement of 72,267 contracts, the market technically showed signals of extended liquidation.

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