US natural gas futures were down on Monday due to strong domestic production, falling demand, and above-average gas inventories, which led to bearish sentiment.
Both the front-month Henry Hub natural gas futures and the continuous contract were down 2.89% at $3.195 per million British thermal units.
Natural gas output continued to hold steady at above 109 billion cubic feet per day, even as demand softened over the course of the past week, from 100 Bcf per day to 95 Bcf per day on Saturday, amid weak power burn and a dip in exports to Mexico, according to NRG Energy.
Meanwhile, US natural gas inventories, at 2,483 Bcf for the week ended May 22, were 21 Bcf, or 1%, above the prior year's figure and 144 Bcf, or 6%, above the five-year average for this period, according to the US Energy Information Administration.
At the same time, LNG export feedgas is expected to drop to 17.85 Bcf on Monday, compared to the prior week's average at around 18.2 Bcf, and the 30-day moving average at 17.88 Bcf per day, according to the Bloomberg LNG Feedgas Model.
On the bullish front, June 1 marks the unofficial start of Summer, which analysts expect should kickstart the weather-driven demand environment.
Almost the whole of the country is expected to see above-normal temperatures from June 08 to June 14, according to the National Weather Service, which should add to air conditioning demand, and thus, natural gas-fired power burn over the next few weeks.