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U.S. natural gas futures fell below $3 for the first time since May 2021, trading as low as $2.992/MMBtu on Wednesday before the February front-month contract ( NG1:COM ) fell to a new low at 52 weeks, -5.8% to 3.067 USD/MMBtu.
From fears the inability of suppliers to meet winter demand pushed US natural gas prices to a 14-year high of ~$10/MMBtu in August, the US and Europe replenished their reserve supplies ahead of winter, and relatively warm Northern Hemisphere temperatures until now, the decline in demand for heating has persisted.
The longer-than-expected shutdown of the Freeport LNG terminal due to a fire in June limited gas exports and thus increased US inventories, contributing to lower prices; the facility moved closer to restarting operations as the US Coast Guard determined that the hazard study met its requirements.
ETFs: (NYSEARCA: ENG), (UGAZF), (COOKING), (COLD), (UNL), (FCG)
Gas-focused stocks have fallen sharply over the past month: EQT (EQT) -8.6%Area Resources (RRC) -5.1%Antero Resources (AR) -14.2%Southwestern Energy (SWN) -9.7%Chesapeake Energy (CHK) -7.6%.
While natural gas prices may soon fall, the US Natural Gas ETF ( UNG ) is “probably a bad bet today because of the massive ‘contango decay’ built into the futures curve,” writes Harrison Schwartz in an analysis recently published on Seeking Alpha.