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US Natural Gas Update: Futures Slip 2.5% in Early Trade as Milder Weather Outlook Weighs

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US natural gas futures fell over 2.5% in early Monday trade, weighed down by forecasts for milder weather in the second half of the month, ample domestic inventories and weaker liquefied natural gas export flows.

The front month Henry Hub contract and the continuous contract price fell by 2.57% to about $3.15 per million British thermal units.

"US Gas markets continue their descent as weather outlooks for the second half of June shift more mild and take some of the potential gas demands for power generation significantly lower," Gary Cunningham of Tradition Energy said in a note.

"We are up against some support at $3.13 but if we drop through it we could tier to the cushion between $3.08 and $3.06," he added.

According to data from Baker Hughes (BKR) released Friday, the number of gas rigs in the US slipped by one to 124 in the week ending June 5, compared with 125 in the previous week.

The recent decline in output has helped stave off the surplus in storage but inventories are still 5% higher than the seasonal five-year average, indicating comfortable supply levels going into summer, Trading Economics said.

Meanwhile, net flows to major LNG export terminals has averaged 16.4 billion cubic feet per day in June, compared to 17.1 bcfd in May, with maintenance work at several facilities limiting exports, Trading Economics added.

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