Liquefied natural gas is loaded for transport in Texas last year.
Photo: Marie D. De Jesús/Associated PressNatural-gas prices slid Monday, dragged down by cooler-than-expected weather sweeping across the country and reduced gas-powered cooling demand as the end of summer approaches.
Futures for October delivery fell as much as 6% before closing down 1% at $2.63 a million British thermal units. The move follows a rapid climb that started two months ago, when hot temperatures had air conditioners on full blast and the global economy began to reopen, pushing up demand from facilities that liquefy gas.
Demand for the power-generation fuel tends to rise with extreme temperatures. In the summer, that means hot weather can mark a bullish signal for the market.
Now, weather forecasts indicate temperatures will decrease over the next few weeks throughout the Northeast and Midwest. Some analysts said that could bring an end to the climb, which began in June after natural-gas futures hit the lowest price in a quarter-century.
Several compared the outlook to a 2016 rally that eventually faded. Prices soared about 87% between March and July that year to almost $3.00 per million British thermal units. But because they have risen so much recently, some analysts said the shifting demand outlook could drive more volatility.
“Demand will be light the next few days as weather systems with showers sweep across the northern and central U.S. with highs of upper 60s to 80s,” NatGasWeather.com said.
Commodity Weather Group said lows into the 40s could creep into Chicago over the next 11- to 15-day period when cooling expands more into the South and East as well.
Uncertainty around the global economic recovery is also damping prices. With most Americans working from home and businesses shut, analysts say demand could disappoint in the fall. That would help push up inventories ahead of the winter heating season and alleviate any concerns about shortages.
The fallout from Hurricane Laura is also weighing on sentiment. Export facilities for liquefied natural gas, or LNG, that operate on the Gulf Coast were forced to shut down, tamping down export demand.
Analysts at energy advisory firm Ritterbusch & Associates said the steep increase in natural-gas prices has reached its top.
“We expect declines going forward to be gradual, with nearby futures ratcheting lower possibly to about the $2.43 mark at most by next week at this time,” they wrote in a note to clients.
Write to Julia-Ambra Verlaine at Julia.Verlaine@wsj.com
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