US natural gas futures ended 2.7 percent lower on Monday after rising over the weekend to their highest since February on forecasts of slightly lower demand and somewhat higher production. Front-month gas futures on the New York Mercantile Exchange closed down 7.8 cents at $2.802 per million British thermal units. Some of the most active options on Monday were the $1.75 July 2015 puts and the $4.25 August 2015 calls.
Thomson Reuters Analytics said the Global Forecast System weather model for the lower 48 US states still called for warmer-than-normal temperatures over the next two weeks, with 84 population-weighted cooling degree days and 56 heating degree days. That put HDDs for the next two weeks below the norm of 65 for this time of year and CDDs above the norm of 74. Traders noted this was the time of year that CDDs usually start to exceed HDDs.
Thomson Reuters Analytics forecast consumption in the lower 48 over the next two weeks would ease to 54.0 billion cubic feet per day (bcfd) from 54.8 bcfd on Friday. That is above the 30-year norm of 50.4 bcfd for this time of year. Still, traders said demand over the past two weeks was still at its lowest in seven months because both heating and cooling demand were minimal in the middle of the spring.
Production in the lower 48 was expected to edge up to 73.0 bcfd on Monday from 72.8 bcfd on Friday. That compared with 69.4 bcfd at this time last year and a record high of 74.5 bcfd in December, according to Thomson Reuters Analytics. Net imports from Canada were expected to hold at 5.6 bcfd, the same as Friday, while exports to Mexico were seen easing to 2.6 bcfd from 2.7 bcfd on Friday. The Excel tanker was returning to Japan with liquefied natural gas from Kenai in Alaska, while the Matthew LNG tanker left the Everett LNG terminal in Massachusetts, according to Thomson Reuters' Interactive Map. The Al Khattiya LNG tanker was near the Bahamas as it moves toward the US Gulf Coast.
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