US natural gas futures edged higher on Thursday ahead of the weekly storage report expected to show a small draw during the warmer-than-normal Christmas and New Year's holiday week. Traders noted the small price increase came amid steady forecasts for the weather to remain colder-than-normal through Monday before turning warmer-than-normal for the rest of January.
In early forecasts, analysts said utilities pulled 82 billion cubic feet of gas from storage during the week ended on December 30. That would be the smallest draw for that week since 2011 and compares with declines of 237 bcf in the prior week, 98 bcf a year earlier and a five-year average of 107 bcf for the week.
The US Energy Information Administration will release its weekly gas storage report at 10:30 am EST (1530 GMT) on Thursday. After falling to a two-week low on Wednesday, front-month gas futures for February delivery on the New York Mercantile Exchange were up 2 cents, or 0.6 percent, at $3.287 per million British thermal units at 8:15 am EST (1315 GMT) on Thursday. That put the front-month on track for its first gain in a week after losing 17 percent over the prior four sessions due to moderating long-term winter weather forecasts.
Thomson Reuters projected the cold expected over the next several days would boost US gas demand to 100.6 billion cubic feet per day (bcfd) this week and 111.0 bcfd next week from an average of 90.9 bcfd last week. Despite the small draw expected for last week, analysts projected the amount of gas in storage would likely decline more quickly than normal this winter in part because drillers were producing less of the fuel.
US output averaged 70.8 bcfd over the past 30 days, compared with 72.6 bcfd a year earlier, 72.3 bcfd for the same period in 2015 and 66.6 bcfd in 2014, according to Reuters data. Over the past week, however, production rose to an average of 71.2 bcfd, with prices in the Marcellus and Utica shale basins in Pennsylvania, Ohio and West Virginia holding near their highest levels in two years.
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