US natural gas prices have plummeted in recent weeks, defying earlier predictions of winter shortages. Instead, the market finds itself grappling with a substantial supply surplus. The price for next month’s gas delivery contract tumbled 6.4% to $2.048 per million British thermal units, while contracts for October and January 2025 followed suit, dropping 4.7% and 2.1%, respectively.

The dramatic shift is attributed to a confluence of factors. A milder-than-expected winter across the US significantly reduced demand for residential heating, leading to a buildup of gas inventories.

Simultaneously, production has remained robust despite the lower demand, further bolstering the surplus. Forecasts predict moderate temperatures throughout July, which will likely further dampen demand for gas-fired electricity generation. As a result, experts anticipate that US gas inventories will reach their highest levels since 2016 by the end of October.