Natural-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.