U.S. Henry Hub natural gas futures dropped on Wednesday on lower demand expectations domestically and abroad, Kallanish Energy reports.
The front-month, futures contracts for delivery in June fell 4.1%, or 7.9 cents, to settle at $1.869 per million British thermal units (MmBtu). The gas futures rose as much as $1.95/MmBtu earlier in the session.
The reportedly cancellation of up to 25 U.S. liquefied natural gas (LNG) cargos for June due to lockdowns across the globe have weighed on prices. Milder than expected weather demand also pressured the futures.
However, Wednesday’s settlement – which was the first day of trading as a front-month contract – is still roughly 7% higher than the previous contract expiry.
Earlier this week, credit rating agency Moody’s reduced its medium-term price band for Henry Hub gas prices to $2-3/MmBtu, from $2.25-3.25/MmBtu previously forecast.
Moody’s maintained the near-term outlook for the U.S. gas benchmark unchanged at $2/MmBtu in 2020 and $2.25/MmBtu in 2021.
It believes the U.S. gas oversupply will gradually taper off through 2021, as key producers scale back capex and production this year and the next. Most of the reductions are expected in the Appalachian basin – the country’s largest gas producing region.
This post appeared first on Kallanish Energy News.