US natural gas futures fell below $3 due to mild winter weather, contributing to the country’s worst commodity selloff.
On Thursday’s New York Mercantile Exchange, gas for February delivery traded as low as $2.857 per million British thermal units. After falling below $3 on Wednesday, prices are at their lowest since May 2021.
Fears that suppliers would be unable to meet winter demand have been dispelled by a confluence of factors, causing gas prices to fall after reaching a 14-year high of $10.03 in August.
The United States and Europe were able to replenish their buffer inventories in time for winter, and relatively mild seasonal temperatures in the Northern Hemisphere have so far slowed demand for heating.
In addition, a longer-than-expected shutdown at a major Texas liquefaction terminal has limited US gas exports, boosting domestic supplies.
Over the last two years, US natural gas production has rebounded to record highs, flooding the market with fuel.
In recent years, natural gas has been one of the most bullish commodity stories. Prices reached an all-time high in August amid a global supply shortage exacerbated by Russia’s invasion of Ukraine last year.
However, according to data released Friday by the US Commodity Futures Trading Commission, hedge funds have become the most bearish on US gas prices in nearly three years.
Oil Prices Rose 1%
China, the world’s top oil importer, recently reopened its economy. This signaled a demand increase; hence the oil prices increased by 1% on Thursday.
By 1046 GMT, Brent crude futures had risen 78 cents, or 0.9%, to $86.90 per barrel. West Texas Intermediate (WTI) crude futures in the United States were up 75 cents, or 0.9%, to $80.90.
Meanwhile, crude inventories in the United States increased by 533,000 barrels to 448.52M barrels in the week ending January 20, according to the Energy Information Administration.
Since June 2021, crude stock prices have reached their highest point. The increase, however, fell short of forecasts calling for a million-barrel increase.
The OPEC+ ministerial panel meeting on February 1 should endorse the oil producer group’s current output levels, according to OPEC+ sources.
Global economic growth will barely exceed 2% this year, implying another downgrade is possible. This contrasted with market optimism since the beginning of the year.