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U.S. natural gas prices fell early on Tuesday alongside a slide in crude oil prices, despite forecasts of high natural gas demand this week with expected high temperatures.
The U.S. benchmark natural gas price at the Henry Hub was trading at $3.618 per million British thermal units (MMBtu) at 12:32 p.m. EDT on Tuesday, down 2.19% on the day.
The natural gas price fell from the $3.70 / MMBtu level it hit on Monday. On Tuesday, natural gas prices fell as crude oil prices retreated from multi-year highs seen in early trade. The price of oil fell as traders turned to profit-taking and others started to fret that the OPEC+ discord could bring about another oil price war like the one from March 2020.
Last week, U.S. natural gas prices jumped amid a tight natural gas market and expectations of high demand for electricity in hotter than usual weather in many parts of the United States. The Henry Hub rally last week resulted in the highest price for the prompt futures in 29 months. Prices continued to rise as a heatwave gripped the Pacific Northwest last week.
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This week, the weather outlook for natural gas prices also looks bullish. According to NatGasWeather.com, demand for natural gas in the United States is set to be high in the period July 6 to July 12.
“Strong national demand will open the week as hot high pressure brings highs of 90s to the East, while also hot over the West w/highs of 90s and 100s besides the immediate coast,” NatGasWeather’s forecast reads.
A chilly weather system is expected into the N. Plains on Tuesday with showers and highs of 60s and 70s, then across the Great Lakes and East late in the week to cool current heat and ease national demand in the middle of the week. “However, high pressure will return across the East next weekend w/highs back into the 90s for strong national demand,” according to NatGasWeather.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.