A one-cent gain in US natural gas futures on Friday was enough to push the front-month to its highest close since late September. Traders noted prices were up earlier in the day on forecasts for colder weather this winter than in the past two years but pulled back to be nearly flat on forecasts for demand to hold steady for the next two weeks. Front-month gas futures rose 1.1 cents to settle at $3 per million British thermal units, their highest close since September 29 for a second day in a row.
For the week, the contract ended up almost 5 percent after falling nearly 5 percent last week. Traders said consumers were expected to burn more fuel to heat homes and businesses as the weather turns colder through the end of October. But that increase would only offset declines in the amount of gas burned to generate power to run air conditioners. Thomson Reuters forecast US gas consumption would hold around 71.9 billion cubic feet per day for the next two weeks, the same as this week.
Production in the lower 48 US states fell to an average of 72.2 bcfd due to disruptions in the Gulf of Mexico caused by Hurricane Nate. That compares with an average of 73.3 bcfd in the first week of October and a two-year high of 74.8 bcfd in late September.
Traders also noted a force majeure earlier in the week that shut part of the Texas Eastern pipeline in Ohio. That outage prevented some production from getting to market and helped depress next-day gas prices by trapping the fuel in the region.
On Thursday, next-day gas at the Dominion South Hub in southeast Pennsylvania fell to its lowest level since September 2016. Analysts said utilities likely added 69 billion cubic feet of gas into storage in the week to October 13, leaving the total amount of fuel in inventories near the five-year average for this time of year at around 3.7 trillion cubic feet (tcf). That compares with a 77 bcf increase during the same week a year earlier and the five-year average of 78 bcf for the period.
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