US Natural Gas Prices Slide on Record Output and Ample Storage

US natural gas futures fell by about 2% on Thursday to a two-week low due to record output and ample storage. The front-month contract for October delivery on the New York Mercantile Exchange dropped 4.5 cents, or 1.6%, to $2.777 per million British thermal units.

This is the lowest close since August 25 for a second day in a row. Despite expectations that hot weather and high air conditioning demand last week would cause energy firms to add less gas to storage than usual, analysts forecasted an increase of 31 billion cubic feet (bcf) during the week ended September 4.

This is lower than the 69 bcf added during the same week last year and the five-year average increase of 52 bcf for the period. The US has seen record output, with average gas production in the Lower 48 states rising to 113.4 billion cubic feet per day (bcfd) so far in September.

The ample storage levels are due to record output and mild spring weather, which have allowed energy firms to keep inventory above the five-year average since March. Meteorologists forecast warmer than normal weather through September 25, pushing power generators to burn more gas than usual to keep air conditioners running.