US natural gas futures on Tuesday edged higher on forecasts for more heating demand than previously expected over the next two weeks. Front-month gas futures rose 1.6 cents, or 0.5 percent, to settle at $2.962 per million British thermal units. Thomson Reuters forecast US gas consumption would rise to 73.0 billion cubic feet per day (bcfd) next week from 71.9 bcfd this week. On Monday, the data showed production next week was expected to decline to 71.6 bcfd.
Production in the lower 48 US states on Tuesday was expected to rise to 74.4 bcfd, its highest level so far this month. Over the past 30 days, output has averaged 73.7 bcfd, putting it well over the 70.0 bcfd seen during the same period a year ago. That, however, is still a little short of the 73.8 bcfd seen over the same 30-day period in 2015 when output was at a record high. Analysts forecast those production gains would continue in coming months with the US Energy Information Administration on Monday projecting output from shale fields alone would increase for an eighth month in a row to a record high 60.9 bcfd in November.
Analysts said utilities likely added 69 bcf of gas into storage in the week to Oct. 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.
Analysts forecast utilities will add just 1.7 trillion cubic feet (tcf) of gas into storage during the April-October injection season due in part to low output earlier in the year and rising sales abroad. That is much less than the 2.1 tcf seen on average over the past five years. If correct, that would leave stockpiles at the end of October at 3.8 tcf versus a record high of 4.0 tcf on Oct. 31 last year and a five-year average (2012-2016) of 3.9 tcf.
US gas exports were expected to average 8.8 bcfd this week, up 75 percent from a year earlier, due primarily to rising shipments of liquefied natural gas, according to Reuters data. Some traders said gas prices could spike in the next month or two if inventories are lower than normal in a few months and the coming winter is colder than the past two snow seasons, which were among the warmest on record. In their latest forecasts, meteorologists at the US National Oceanic and Atmospheric Administration (NOAA) predicted temperatures from November through March would be close to the 10-year average, making them about 13 percent colder than last year.
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