NEW YORK: US natural gas futures rose nearly 4% on Monday on forecasts for colder weather that could result in higher heating demand over the next two weeks and a jump in European gas prices that should keep US liquefied natural gas (LNG) exports near record highs.
Front-month gas futures rose 14.4 cents, or 3.9%, to settle at $3.834 per million British thermal units (mmBtu). “The expectations that we’re going to get a little bit colder around Christmas, along with prices soaring in Europe because of cold temperatures and tightness to supply seems to be providing the market a big boost,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “The move today is in contrast to the oil market that’s concerned about COVID lockdowns cause there’s a sense that the lockdowns won’t impact natural gas,” he said. Gas prices in Europe jumped more than 9% to their highest since hitting a record in early October after Russian gas flows to Europe reduced to a trickle ahead of an eagerly watched capacity auction. Refinitiv projected average US gas demand, including exports, would rise from 109.7 billion cubic feet per day last week to 123.7 bcfd this week before easing to 120.1 bcfd next week. Data provider Refinitiv estimated 413 heating degree days (HDDs) over the next two weeks in the lower 48 US states, up from the 401 HDDs estimated on Friday. The normal is 426 HDDs for this time of year. HDDs, used to estimate demand to heat homes and businesses, measure the number of degrees a day’s average temperature is below 65 Fahrenheit (18 Celsius). However, mostly mild weather since mid-November has kept heating demand low and allowed utilities to leave so much gas in storage that there will soon be more of the fuel in stockpiles than is usual for the time of year for the first time since April. The amount of gas flowing to US LNG export plants has averaged 11.9 bcfd so far in December, now that the sixth train at Cheniere Energy Inc’s Sabine Pass plant in Louisiana is producing LNG. That compares to 11.4 bcfd in November and a monthly record of 11.5 bcfd in April. Global gas prices have repeatedly reached all-time highs over the last few months as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls caused power blackouts in China. US futures jumped to a 12-year high of more than $6 per mmBtu in early October, but have retreated because the United States has plenty of gas in storage and ample production for winter.
Data provider Refinitiv said output in the US Lower 48 states has averaged 96.7 billion cubic feet per day (bcfd) so far in December, which would top the monthly record of 96.5 bcfd in November.
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