After peaking for 16 weeks, gas prices have fallen as production recovers and surplus inventories combine with oversupplied hydroelectric power in the West, pushing down electricity prices.

⑴ US natural gas futures fell by about 2% on Friday, after reaching a 16-week high in the previous session due to forecasts of late June heat and higher demand. The July delivery contract settled at $3.281 per million British thermal units, down 1.6%, remaining basically flat for the week, while last week it had risen about 13% in total. ⑵ According to institutional data, since June, the average daily output in the US mainland 48 states has dropped to 108.8 billion cubic feet, lower than May’s 109.7 billion and the record 110.6 billion set last December. However, analysts pointed out that mild weather has kept inventory surpluses about 5.4% above normal levels. ⑶ In the spot market, West Texas Waha hub gas prices have risen to their highest since early February but remain negative, due to rising demand as summer approaches and pipeline operators ending spring maintenance. Meanwhile, abundant low-cost hydropower and sluggish demand in the Pacific Northwest pushed next-day prices at the Washington-Oregon border’s Mid-Columbia hub down to 13 cents per megawatt-hour, the lowest since May 2020. ⑷ Weather forecasts indicate mostly warm conditions before June 20, which is expected to boost gas-fired power generation demand. Institutions expect total demand in the US mainland 48 states to rise from 98.4 billion cubic feet this week to 100.4 billion next week and 104.3 billion in two weeks. ⑸ Average flows to the US’s nine major liquefied natural gas export plants have dropped from 17.1 billion in May to 16.4 billion so far in June, as several plants underwent spring maintenance, including Golden Pass, a joint venture between ExxonMobil and QatarEnergy, and the Freeport LNG project.