US natural gas futures fell just before options contracts for front-month delivery expired, erasing earlier gains that had been triggered by an increase in domestic gas supplies flowing to liquefied natural gas export terminals on the Gulf Coast. Losses were likely aided by a cool shift in weather forecasts, signaling lower demand for gas-fired power to run air-conditioning.
Price swings often occur during options expiry, on the penultimate day of trading for the front-month US gas futures contract, and on the final day of US gas futures trading itself, which will take place on Wednesday. Prices are more volatile during contract expiration because the drop-off in liquidity means individual transactions move the market more.
