US natural gas futures moved lower in midday trading on Monday as declining power sector demand, reduced LNG export feedgas flows, and bearish near-term weather forecasts pressured prices.
The front-month Henry Hub contract and the continuous contract both fell 2.27% to $2.845 per million British thermal units.
"Natural gas markets are pulling back this morning as outlooks for power sector demand and continued maintenance at LNG export terminals are simply too bearish for a rally," Gary Cunningham of Tradition Energy said in a Monday note. He added that the August contract is likely to remain range-bound between $2.80 and $2.95/MMBtu until market fundamentals shift.
Natural gas demand declined by 5 billion cubic feet per day last week, falling from 114 Bcf/d to 106 Bcf/d, according to NRG Energy. The decline was largely driven by weaker power sector consumption as temperatures moderated across the Midwest and East Coast. Other demand segments remained largely unchanged.
Weather forecasts point to warmer-than-normal conditions west of the Rocky Mountains this week, cooler-than-normal temperatures across states near the Great Lakes, and near-normal conditions elsewhere, NRG said.
Supply trends also added pressure to prices. Trading Economics reported that average natural gas production in the Lower 48 rose to 110.2 Bcf/d so far in July, up from 110.0 Bcf/d in June. At the same time, increased solar and wind generation across the US has reduced reliance on gas-fired power plants, limiting demand for natural gas in the electricity sector.
LNG export activity remained another bearish factor. Vortexa data showed US LNG loadings totaled 2.2 million tonnes across 31 cargoes last week, more than 5% below the four-week average.
Freeport LNG exports were a key contributor to the decline, with volumes falling to 0.2 million tonnes across three cargoes, roughly 30% below recent levels due to maintenance activities. Feedgas deliveries to the facility declined following a temporary power outage and the start of planned summer maintenance that is expected to continue into August, Vortexa said.