Front-month gas futures for September delivery on the New York Mercantile Exchange were down 6.1 cents, or 2.7%, at $2.170 per million British thermal units (mmBtu) at 11:16 am EDT (1516 GMT). That erased much of Thursday's 4% rally and put the contract back to within a dime of the $2.070 per mmBtu close on Aug. 5, which was its lowest settle since May 26, 2016.
Traders noted the contract could not break above the 50-day moving average on Thursday. That average has remained a hard ceiling for the front-month settle since December, with the contract only closing above the 50-day average three times this year.
Despite the decline on Friday, the front-month was still up 3% for the week, putting it on track for its first increase in five weeks.
Futures for Calendar 2020 slipped to $2.38/mmBtu, their lowest on record according to Refinitiv data going back to 2016.
In Texas, meanwhile, spot power prices almost tripled to a record high of $751 per megawatt hour for Friday as the state's grid operator took emergency measures for a second time this week to keep the lights on as consumers cranked up their air conditioners to escape a heat wave.
Analysts said futures have mostly traded near multiyear lows since May because record production and mild spring weather allowed utilities to inject huge amounts of gas into storage, shrinking a massive inventory deficit and removing concerns about shortages this winter even though power demand and liquefied natural gas (LNG) exports are on track to hit all-time highs.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production expected to keep growing, analysts said, stockpiles should reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on October 31.
With slightly cooler weather expected, Refinitiv cut its forecast for average demand next week from 92.3 billion cubic feet per day (bcfd) to 91.4 bcfd as power generators burn less fuel to meet air conditioning use.
Refinitiv forecast demand will slide to 87.7 bcfd during the week before the US Labor Day holiday as the summer comes to an end even though pipeline and LNG exports are expected to rise.
Exports to Mexico rose to 5.2 bcfd on Thursday, its highest since June, according to Refinitiv data. That compares with a daily record high of 5.5 bcfd in January.
Refinitiv projected gas flows to LNG export plants would rise from around 4.2 bcfd this week to an estimated 4.8 bcfd next week and 5.5 bcfd in two weeks as units at Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas end outages and new units enter service at Freeport LNG's Freeport in Texas and Kinder Morgan Inc's Elba in Georgia.
Traders said they expect the LNG Jurojin tanker, which is sitting off the coast of Freeport, to be the first to pick up a cargo at the plant. The company has not identified the vessel that will pick up the first cargo but said it expected to load that cargo in coming weeks.