US natural gas futures dropped by nearly 7% on Wednesday, retreating from a seven-year high in the previous session on expectations of a mild winter in the coming weeks. The front-month price for November delivery fell 40.3 (6.9%) to $5.477 per MMBtu. Milder temperatures are also expected to allow US gas inventories to rise to near-normal levels before the winter heating season. Analysts predict utilities built more gas to storage than usual for a third straight week last week.
Analysts also expect that US gas demand, including exports, would increase to 83.7 Bcfd next week from 82.6 Bcfd this week on the rising use of space heating. Higher gas prices in Asia and Europe are also expected to keep traders buying US LNG. An industry survey showed that feedgas flows to major US LNG plants have averaged 10.3 Bcfd so far in September, slightly declining from 10.5 Bcfd in August.
