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US natural gas futures fell just before options contracts for front-month delivery expired, erasing earlier gains that had been triggered by an increase in domestic gas supplies flowing to liquefied natural gas export terminals on the Gulf Coast. Losses were likely aided by a cool shift in weather forecasts, signaling lower demand for gas-fired power to run air-conditioning.
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Price swings often occur during options expiry, on the penultimate day of trading for the front-month US gas futures contract, and on the final day of US gas futures trading itself, which will take place on Wednesday. Prices are more volatile during contract expiration because the drop-off in liquidity means individual transactions move the market more.
- Futures for June delivery settled -1.3c, or -0.5%, to $2.894/mmbtu on Nymex
- The more active July contract settled -1.1c, or -0.4%, to $3.010/mmbtu
- June futures expire on May 27
- Options expired Tuesday
Weather:
- Forecasts shifted cooler, with below-average temperatures expected across California through May 30 and the Eastern US from May 31 to June 4: Commodity Weather Group
- See WHUT for a map of latest 6-10 day weather forecast: NOAA
Daily BNEF Gas Data:
- Lower-48 dry gas production on Tuesday ~110.8 bcf/day, or +3.3% y/y
- Down by 0.2% from a week earlier
- Lower-48 total gas demand on Tuesday ~66.9 bcf/day, or +7.2% y/y
- Dry gas exports to Mexico on Tuesday ~7.8 bcf/day, or -3.7% w/w
- Estimated gas flows to LNG export terminals on Tuesday ~18.2 bcf/day, or +8% w/w
Gas Market News:
This story was produced with the assistance of Bloomberg Automation.
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