The most volatile year for natural-gas prices in the modern trading era has taken another sharp turn, this time a counterseasonal tumble .
U.S. natural-gas futures have shed 24% since Thanksgiving , including an 11% drop on Monday, at a time of year when prices for the heating and power-generation fuel usually rise with demand to warm businesses and homes .
Monday's big move was the 39th time this year that prices rose or fell at least 7% in a day, the most in data going back to 1992, according to Dow Jones Market Data. Futures trading launched in 1990 following the deregulation of natural-gas markets.
Futures for January delivery settled Monday at $5.577 per million British thermal units. That is more than 50% higher than a year ago, but down more than $4 from the highs reached this summer when inventories were alarmingly low and surging energy costs helped drive inflation to the highest levels in decades.
Since then, domestic drillers have notched daily output records , heating season was delayed by mild weather and a lot of gas that would have otherwise been liquefied and shipped abroad via a fire-damaged LNG export terminal was socked away for winter instead.
The U.S. gas-inventory deficit last week was 2.4% below normal levels for this time of year, compared with a double-digit deficit earlier this year that lingered into September. Forecasts for warmer weather in December have analysts penciling in a surplus to the five-year average by the middle of the month.
"We have plenty of gas and prices are going to roll down," said Francisco Blanch, a commodity and derivative strategist at BofA Securities.
The bank expects natural-gas prices to average $4.50 per million British thermal units next year, and possibly drop below $4, where they spent much of the previous decade thanks to the shale-drilling boom that flooded the market with fuel.
TPH & Co. predicts robust supply will outstrip demand and send gas prices down toward $3 in the second half of next year. That outlook prompted the energy-focused investment bank to downgrade shares of gas producers Antero Resources Corp., EQT Corp. and Coterra Energy Inc. to hold from buy.
Those companies have been some of the market's top performers this year—up 82%, 70% and 38%, respectively. Lower gas prices would come at their expense. But cheaper fuel would improve manufacturers' margins and leave more money in the pockets of American consumers, who are shouldering a greater share of heating and power expenses than they did before the work-from-home era.
Predictions for cheaper gas next year don't rule out the potential for big swings before then. Spikes are still possible if temperatures plunge. Meanwhile, the gas market has been whipsawed by the situation on a Texas barrier island where Freeport LNG's export facility has been shut down since a fire in June.
The facility is one of the country's largest, with capacity to export enough gas each day to power metropolitan San Antonio. Every day since the fire, that much gas has backed up into the domestic market, helping to ease supply worries and push down prices.
The latest leg down in price has coincided with Freeport's extending its timeline to resume exports. Freeport received permission from regulators to begin certain repairs last week and aims to resume operations around the end of the year instead of the middle of this month, spokeswoman Heather Browne said.