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Key Moments

  • U.S. natural gas futures for March delivery fell as much as 6.5% to $3.200 per million British thermal units in early Asian trading.
  • Government forecasts called for above-normal temperatures across central and southern regions later this week, with warmth shifting east afterward.
  • Friday’s 2.5% price drop followed a Baker Hughes report showing a notable rise in drilling activity in the Haynesville shale.

Weather-Driven Demand Outlook Weighs on Prices

U.S. natural gas futures extended their slide for a second consecutive session, pressured by expectations for warmer-than-normal temperatures across broad swaths of the country. The anticipated milder conditions are seen curbing demand for natural gas used in heating and power generation.

Contracts for March delivery declined as much as 6.5% to $3.200 per million British thermal units during early Asian trading. A government forecast indicated that temperatures are set to run above average in the central and southern United States from the end of this week, with the warmer pattern expected to shift toward the eastern part of the country thereafter.

Recent Selling Follows Rebound in Drilling Activity

The latest move lower builds on Friday’s 2.5% loss, which ended a three-session advance. That prior decline came after a weekly update from Baker Hughes showed a substantial increase in drilling in the Haynesville shale, a key production area spanning northwest Louisiana and East Texas. A rising rig count is typically associated with potential future supply growth, a factor that can put downward pressure on nearby contracts.

Contract/MetricDetail
March natural gas futuresDown as much as 6.5% to $3.200 per million British thermal units in early Asian trade
Previous session move (Friday)Price decline of 2.5%, ending a three-day rally
Weather outlookAbove-normal temperatures expected in central and southern U.S. from the end of this week, then shifting east
Drilling activityWeekly Baker Hughes report showed a significant uptick in Haynesville shale rigs

From Weather-Driven Spike to Full Reversal

At the end of last month, U.S. natural gas prices surged to their highest level in more than three years as a cold spell boosted consumption and disrupted some supplies. Since then, futures have given back those gains, with the combination of warmer weather projections and signs of increasing drilling activity pulling the market lower.

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