NEW YORK: US natural gas futures soared about 8% to a two-year high on Friday on forecasts for colder weather and higher heating demand over the next two weeks than previously expected, and record gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for February delivery on the New York Mercantile Exchange rose 28.8 cents, or 7.8%, to settle at $3.989 per million British thermal units, their highest close since Jan. 4, 2023. That topped the front-month’s near two-year closing high of $3.946 from a couple of weeks ago on Dec. 24.
But in such a volatile market, that gain was only the biggest daily percentage increase since Jan. 6 when prices jumped over 9%. Ten of the last 12 trading days saw moves up or down of over 5%. That compares with an average daily price move of around 3.7% in calendar 2024.
For the week, the front-month was up about 19%, its biggest weekly percentage gain since September, after sliding about 11% over the past two weeks.
Analysts projected the next three storage reports for the weeks ending Jan. 10, 17 and 24 could each show utilities pulling over 200 billion cubic feet (bcf) of gas from inventories to meet soaring heating demand. Some analysts said withdrawals this month could top the current record high of 994 bcf set in January 2022, according to federal energy data.
Those storage withdrawals could wipe out the current surplus of gas in storage, which stands near 7% over the five-year average, by the end of January. That would be the first time stockpiles would fall below the five-year average since January 2022.
Financial firm LSEG said average gas output in the Lower 48 US states slid to 102.6 billion cubic feet per day (bcfd) so far in January, down from 103.8 bcfd in December. That compares with a record 105.3 bcfd in December 2023.
Since daily output hit a 10-month high of 106.0 bcfd on Dec. 30, supplies were on track to drop by around 5.9 bcfd to a preliminary eight-week low of 100.1 bcfd on Friday. The amount of freeze-offs, however, was lower than the 6.2 bcfd projected on Thursday.
Cold weather output declines so far this year have been much smaller than previous winters. Freeze-offs cut gas output by around 16.5 bcfd from Jan. 8-16 in 2024, 19.4 bcfd from Dec. 21-24 in 2022, and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.
Meteorologists projected weather in the Lower 48 states would remain mostly colder than normal through Jan. 25, with the coldest days still to come.
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