NEW YORK: US natural gas futures jumped about 8% to a three-week high on Monday on forecasts for cooler weather and more heating demand over the next two weeks than previously expected.
Prices also rose as the amount of gas flowing to US liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG’s export plant in Texas exited an eight-month outage in February.
Front-month gas futures for May delivery on the New York Mercantile Exchange rose 16.1 cents, or 7.6%, to settle at $2.275 per million British thermal units (mmBtu), their highest close since March 21.
That puts the contract close to topping its 50-day moving average, a key point of technical resistance, for the first time since mid-December.
On Friday, gas futures fell to a two-week low of $1.946 per mmBtu in intraday trade, while spot gas for Monday at the Henry Hub benchmark in Louisiana collapsed to a 30-month low of $1.87.
“As front-month gas prices crumble towards the $2.00/MMBtu threshold, shorts appear to be taking profits and decreasing exposure - potentially narrowing the scope of downward pressure on NYMEX gas futures later this year,” analysts at energy consulting firm EBW Analytics said in a note.
Last week, gas speculators cut their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for the sixth time in seven weeks to their lowest since late March, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.
Freeport LNG’s export plant, which shut in June 2022 after a fire, was on track to pull in about 2.2 billion cubic feet per day (bcfd) of gas on Monday, the same as its two-week average, according to data provider Refinitiv.
That was above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce LNG.
Average gas flows to all seven big US LNG export plants rose to 14.0 bcfd so far in April, up from a record 13.2 bcfd in March.
The seven big US LNG export plants can turn about 13.8 bcfd of gas into LNG.
Refinitiv said average gas output in the US Lower 48 states rose to 100.1 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January.
Meteorologists projected the weather in the Lower 48 states would remain mostly colder than normal from April 17-25 before turning near normal from April 26-May 2.
With the weather expected to remain cooler for longer, Refinitiv forecast US gas demand, including exports, would rise from 94.1 bcfd this week to 94.8 bcfd next week.
Mostly mild weather during the winter of 2022-2023 allowed utilities to leave more gas in storage than usual.
Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended April 7 and were expected to end about 23% above normal during the warmer-than-normal week ended April 14, according to federal data and analysts’ estimates.
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