US Natgas Prices Fall to Two-Week Low on Record Output

US natural gas futures prices have dropped to a two-week low due to record output and ample storage levels. According to LSEG, average gas production in the Lower 48 states has reached 113.5 billion cubic feet per day (bcfd) so far in September, surpassing the previous monthly high of 112.2 bcfd in August.

The higher output and mild weather have resulted in a significant increase in gas inventory levels, with storage now above the five-year average since March. However, the hot weather last week may have reduced the amount of gas stored by 1%, bringing it back to 4.3% above normal.

Spot power prices at the South Path-15 Hub (SP-15) in Southern California have surged by around 82% to $84 per megawatt-hour, their highest price since July 2024, as consumers crank up their air conditioners. Meteorologists forecast that warmer-than-normal weather will continue through September 24, pushing power generators to burn more gas than usual.

LSEG projected a decrease in average gas demand in the Lower 48 states from 111.1 bcfd this week to 109.1 bcfd next week, which is lower than their previous forecast on Tuesday.