Natural Gas Prices Hit Lowest Since Last October
Natural gas prices are low once more and the previous session's gains have disappeared as warm weather forecasts persist.
Quick overview
- Natural gas futures in the U.S. have dropped to $3.02/MMBtu, the lowest since October of last year.
- Warming temperatures have significantly reduced heating demand, contributing to the price decline.
- Despite the recent drop in prices, high export levels and potential future demand from the EU could influence the market.
- Gas prices previously peaked at $7 last month, but have since decreased due to milder weather forecasts.
The price of natural gas futures in the United States slipped to $3.02/MMBtu, which marks the lowest point for this commodity since October of last year.
Warming temperatures led to a four-month low for natural gas as heating demand dropped sharply from where it was several weeks ago during the massive cold front. The United States was plunged into extremely cold and icy winter weather in late January and early February, but now the weather has warmed considerably and caused a massive price drop off.
The gains that were made during the last session have completely disappeared and warm weather forecasts continue to keep the price of natural gas low. Those warmer temperatures are expected to start in the southern parts of the United States and spread to the central and northern parts quickly.
U.S. Gas Prices Expected to Remain Low
Prices may shift quickly on Tuesday as markets open back up after the holiday, but the forecasts for mild temperatures will not allow natural gas to move much higher. The weather reports are not the only factor holding back price movement. The latest withdrawal report from the EIA shows that little progress is being made on reducing around-average supply levels.
Those reserve levels are dropping, though, and are no longer near their extreme highs from 2025. That could help bring prices back up if demand picks up. Export levels are still high as well as colder weather dominates in other parts of the world outside the United States.
Last month, gas prices were as high as $7, hitting multi-year highs. Since they have settled down as warm weather creeped in, the market has had a tough time adjusting. Sharp drop-offs have been the norm for the last couple weeks, and investors are baffled by historic decreases. The incredibly high gas prices came at a time when gas reserves were extremely elevated, indicating that there is hope that the market could see another surge like that later this year.
For now, warm weather is expected to remain active across much of the United States and to simply get warmer as February continues. The market may see higher gas demand in the coming months, though, as European Union gas storage levels are around 34%. That could lead to an export surge for the U.S. gas industry.
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