US natural gas futures ended up 1.1 percent on Friday in a choppy market as the latest weather forecasts calling for colder weather over the next two weeks offset a slightly bigger-than-expected storage build. The front-month started in positive territory for the first time in five days early Friday but turned negative after the release of the storage report. It turned positive again Friday afternoon due to the colder weather forecast.
Front-month gas futures on the New York Mercantile Exchange closed up 4.3 cents at $4.02 per million British thermal units. The latest US weather models showed slightly more cold over the next two weeks in the lower 48 states, with 393 heating degree days, up from 385 earlier Friday. Normal HDDs for this time of year are 301, according to Thomson Reuters Analytics.
Gas production in the lower 48 states eased to 68.9 billion cubic feet per day from 69.1 bcfd on Thursday, while consumption climbed to 87.2 bcfd, the most since March, from 82.7 bcfd on Thursday, according to Thomson Reuters Analytics. Demand exceeded production for the first time this heating season earlier this week. The US Energy Information Administration said utilities added 40 billion cubic feet of gas into storage last week in what several analysts expect to be the last build in the April-October injection season.
That was slightly over analysts' estimates in a Reuters poll for a build of 39 bcf but well below the previous week's 91-bcf build. It was also well above builds of 22 bcf last year and the five-year average build of 16 bcf. In technical trade, the NYMEX front-month was close to falling below the 100-day moving average of $3.95 for the first time since October. The 100-day, meanwhile, was close to falling below the 40-day moving average of $3.93 for the first time since April. The front-month was down 9 percent for the week, the biggest weekly loss since February, due to steep losses earlier in the week on warmer forecasts for the end of November. The contract, however, was still up 4 percent so far for the month due to big gains last week on concerns the polar vortex would bring Arctic weather to the Midwest and East.
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