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U.S. natural gas futures fell 2% Friday to a fresh two-week low, the contract's eighth daily decline in a row, weighed by a combination of record production, high storage levels and low spot prices.
The dropoff accelerated after Thursday's surprise bearish EIA report, which said gas inventories rose by a larger than expected 97B cf, compared to a five-year-average increase of 85B cf/day; total inventories now stand at 3.626T cf, and a storage surplus that was 4.8% above the five-year average a week ago widened to 5.1%.
The Israel-Hamas war is raising uncertainty into all commodities, including energy futures; for natural gas, the fighting is disrupting supply coming out of the region at the same time winter cold temperatures descend on Europe.
Front-month Nymex natural gas (NG1:COM) for November delivery ended the week -10.4% at $2.899/MMBtu, its lowest settlement since October 2 and down 35% YTD.
ETFs: (NYSEARCA:UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)
Data provider LSEG said gas output in the Lower 48 U.S. states rose to an average of 103.6B cf/day so far in October - which would be a monthly record if the pace continues - up from 102.6B cf/day in September and a record high of 103.1B cf/day in July.
LSEG also sees U.S. gas demand, including exports, easing to 96.9B cf/day next week from 97.6B cf/day this week, with milder weather coming before soaring to 105B cf/day in two weeks once the weather turns seasonally colder.
Gas flows to the seven biggest U.S. LNG export plants rose to 13.6B cf/day so far in October with the return of Berkshire Hathaway Energy's Cove Point export plant in Maryland from a maintenance outage, up from 12.6B cf/day in September.