Natural gas prices have fallen 13% amid forecasts of more mild weather as winter winds down.
Prices have fallen 34% this year as warmer winter temperatures hurt demand.
Falling prices are a sign that the US needs to scale back gas production, some commentators say.
US natural gas prices plummeted on Monday to their lowest level in a week, as more mild weather ahead is expected to suppress energy demand.
Henry hub natural gas futures for April fell to $2.62 per million British thermal units, according to data from the CME Group, down 12.73% from its previous close of $3 per million BTUs.
Natural gas prices have tanked 34% since the start of the year, with the latest drop spurred by warm weather forecasts for the coming weeks. That’s expected to further crimp the demand for winter heating amid already strong supplies. US natural gas production notched an all-time-high in 2022 according to data from the Energy Information Administration, and the Freeport LNG export hub, which had shuttered its operations in the second half of 2022, was approved for partial reopening in February.
The changes in supply-demand balance are a stark contrast from last year, when issues stemming from Russia’s invasion of Ukraine spiked gas prices on the spot market. Prices peaked at $9.68 per million BTUs in August of last year, shortly after Russia slashed its pipeline gas flows to Europe and sparked fear of an unfolding energy crisis.
The recent pullback in prices has alarmed some industry heads, with Chesapeake Energy CEO Nick Dell’Osso warning that falling prices were sending a “very clear signal” that the US needed to scale back its gas production. That’s the same strategy energy firms used to balance out supply and demand in the 2010s, when the boom in oil fracking led to an overproduction of oil and natural gas, causing prices to plunge.
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Source:: Business Insider