US natural gas futures ended up over 1 percent on Thursday on forecasts for warmer weather following a government report of a smaller-than-expected storage build. The US Energy Information Administration said utilities added 88 billion cubic feet of gas into storage last week, below analysts' forecasts in a Reuters poll for the second week in a row.
That was below the analyst estimates for a 93-bcf build and the prior week's 90-bcf build, but was still well over the 57-bcf build a year earlier and the 46-bcf five-year average.
Front-month September futures on the CME NYMEX closed up 4.9 cents, or 1.3 percent, at $3.841 per mmBtu, after trading between $3.76 and $3.89 during the day.
After falling last week for a sixth consecutive week, the longest stretch of weekly declines in more than four years, September was up 2 percent so far this week but still down 14 percent for the month and off 9 percent for the year.
MDA Weather Services said weather would remain cool over the eastern two-thirds of the United States for the next 10 days and then turn warmer over the following five days.
That warmth was in line with US weather models predicting near-normal temperatures over the next two weeks, with 198 cooling degree days, up from 192 earlier Thursday, versus a normal of 197 for this time of year, according to Thomson Reuters Analytics.
On the NYMEX, the September 2014 contract reached a 2.7-cent discount to October 2014, the biggest in 15 months.
The premium of front-month gas over spot Appalachian coal climbed to $1.35 from $1.29 on Wednesday. A gas premium over $2 makes it cost-effective for utilities to burn coal.
On the IntercontinentalExchange, next-day gas at the Henry Hub, the benchmark supply point in Louisiana, eased a penny to an average of $3.74, a fresh eight-month low.
Next-day New York gas lost a penny to $2.23, the lowest in over two years, while Chicago citygates held just off an eight-month low at $3.77, and the Southern California Border gained eight cents to $4.19.
In the Marcellus, the Dominion South hub in southwestern Pennsylvania gained 2 cents to $2.04, just over the lowest in two years, while the Tennessee Gas Pipe Zone 4 Marcellus hub in north-east Pennsylvania was close to dropping below a dollar, losing 24 cents to $1.19.
In power markets, the next-day Mid Columbia hub in the Pacific Northwest gained $7 to average $55 per megawatt hour, while PJM West in the Mid-Atlantic gained $1 to $37.
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