Natural gas prices experienced a significant decline on Monday, dropping over 7.9% to fall below the $5 threshold. This reduction comes on the heels of a brief spike above the $5 mark last week, a level not seen since December 2022, which was driven by a cold spell. However, recent forecasts from meteorologists indicating a warmer-than-expected winter have contributed to a notable downturn in prices, marking the steepest decline for the energy commodity since late June.
Contributing to this price drop is the record monthly natural gas production in the contiguous United States, which reached 109.7 billion cubic feet per day (bcf/d) in December, surpassing the previous record of 109.6 bcf/d set in November. This increase in supply is exerting downward pressure on prices. On a positive note, gas flows to liquified natural gas (LNG) plants also hit a new monthly high of 18.9 bcf/d in December, up from 18.2 bcf/d in November. Despite contributing to supply, LNG exports help tighten the market by reducing the amount of natural gas available for winter heating and storage.
In other sectors of the energy market, crude oil futures also saw declines on Monday. Both Brent crude, the international benchmark, and US West Texas Intermediate (WTI) fell approximately 2%. The oil markets have started to account for an anticipated global supply glut, which has shifted from mere prediction to a developing reality.
In political and economic developments, during a meeting in New Delhi with Indian Prime Minister Narendra Modi, Russian President Vladimir Putin announced plans for Russia to maintain “uninterrupted fuel supplies” to India. This statement comes amid rising pressure from the United States on Indian refiners to limit their intake of Russian crude oil, revealing the complexities of international energy relations and market dynamics.
