US natural gas futures on Monday jumped 5 percent on forecasts for cooler weather and higher heating demand through the end of November. Traders, however, noted the gains could be short-lived since temperatures were expected to remain at above-normal levels through December and daily production edges higher.
After falling 16 percent in the past two weeks, front-month gas futures for December delivery on the New York Mercantile Exchange rose 13.0 cents, or 5 percent, to settle at $2.749 per million British thermal units. That was the biggest percentage gain since late October when the front-month switched from the November to the December contract.
With storage at record levels and forecasts for warmer-than-normal temperatures in November, December, February and March, analysts said many traders have given up on earlier bullish bets for cold this winter. US gas speculators last week cut their net long positions for a second week in a row to the lowest level since early September. The US Commodity Futures Trading Commission will release its next Commitments of Traders report on Monday around 3:25 pm EST.
After rising to a record high 4.017 trillion cubic feet during the week ended November 4, analysts projected inventories would approach 4.1 trillion cubic feet later this month. Stockpiles will probably remain near record highs through 2016, analysts said, with the latest long-term forecasts calling for weather to stay warmer than normal through December before turning colder than normal in January.
Thomson Reuters projected US gas usage would rise to an average of 76.8 billion cubic feet per day this week and 85.3 bcfd next week from 73.0 bcfd last week due to seasonal increases in heating demand. Traders noted even mild weather in November requires some heating.
Gas supplies, meanwhile, should remain around 77.9 bcfd in the next two weeks, about the same as last week, Thomson Reuters data showed. US production averaged 70.2 bcfd over the past 30 days, its lowest since 2013. But it has risen over the past week to an average 70.8 bcfd as drillers slowly increased output in the Marcellus and Utica shale basins in Pennsylvania and Ohio since prices there have increased.
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