US natural gas futures on Monday edged higher on forecasts for colder-than-normal weather in late January and early February. That increase came despite some forecasts for warmer-than-normal weather until around Jan. 27 and for much of the rest of February and March.
After falling about 6 percent last week on warmer forecasts, front-month gas futures rose 3.9 cents, or 1.2 percent, to settle at $3.243 per million British thermal units.
Recent warmer-than-normal winter forecasts helped push several futures into contango over the past week or so. March 2017 is now at its biggest premium over February 2017 and April 2017 at its biggest premium over March 2017 since the contracts started trading in 2008.
Overall, however, November through March is on track to be slightly colder than last year's record-warm winter but hotter than the 10- and 30-year averages.
Heating degree days totaled 1,757 so far this season, versus 1,688 during the same period last winter, a 30-year average of 1,960 and a 10-year average of 1,901, according to Thomson Reuters data.
Thomson Reuters projected US gas demand would fall this week from an average of 96.2 billion cubic feet per day last week to 91.4 bcfd with weather expected to moderate and power usage down. It should then rise to 110.1 bcfd next week, when the weather is expected to turn cold again.
After the power sector used a record amount of gas to generate electricity last year analysts project it will burn less in 2017 because prices of the fuel are expected to be about 25 percent higher, making coal a cheaper alternative for many generators.
Analysts forecast utilities pulled 127 billion cubic feet of gas from storage during the week ended Jan. 20, the least for that week since 2015, due primarily to light heating demand.
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