US natural gas futures fell below $3.00/mmBtu for the first time in 19 months amid an abnormally mild winter that has helped spark a selloff among the country’s commodities. Doomsday fears that suppliers would not be able to meet wintertime demand have been erased by a confluence of factors, leading gas prices to plunge after hitting a 14-year high of $10.03/mmBtu in August.
Key reasons for the fall: the US and Europe managed to refill their buffer inventories ahead of winter, and relatively balmy seasonal temperatures in the Northern Hemisphere have so far dampened demand for heating; and a longer-than-expected shutdown at a big Texas liquefaction terminal has constrained gas exports and thus boosted domestic supplies, contributing to the lower prices.
Natural gas had been one of the most bullish commodity stories in recent years. Prices hit the August high amid a global supply crunch that was aggravated last year by Russia’s invasion of Ukraine.
But hedge funds have turned the most bearish on US gas prices in almost three years, according to data released by the US Commodity Futures Trading Commission on Friday, Jan. 20. Gas for February delivery traded as low as $2.992/mmBtu on Wednesday, Jan. 5, on the New York Mercantile Exchange, the lowest since May 2021, according to Bloomberg.