US natural gas futures edge up on colder weather

US natural gas futures on Thursday edge up on some mixed forecasts calling for colder weather next week, while a report showing a weekly storage draw nearly matched estimates. Longer term, however, meteorologists forecast the weather would remain mostly warmer than normal through mid-February and for the rest of the winter.
The US Energy Information Administration said utilities pulled 87 billion cubic feet of gas from storage during the week ended January 27, the least for that week since 1999. That was virtually in line with analysts' consensus estimate for a draw of 88 bcf in a Reuters poll and compared with declines of 169 bcf a year earlier and the five-year average of 166 bcf for that week.
Front-month gas futures for March delivery on the New York Mercantile Exchange rose 1.9 cents, or 0.6 percent, to settle at $3.187 per million British thermal units. So far, the November-through-March period 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 have totaled 1,998 so far this season, versus 1,927 during the same period last winter, a 30-year average of 2,242 and a 10-year average of 2,180, according to Thomson Reuters data. US gas demand will rise to 100.6 billion cubic feet per day this week before easing to 99.1 bcfd next week from 90.6 bcfd during the warmer-than-normal weather last week, Thomson Reuters projected.
Even after a few weeks of smaller-than-usual inventory draws, analysts said they expect the amount of gas in storage to decline faster than usual this year despite weaker power demand, in part because exports are higher and production is lower.
After the power sector used a record amount of gas to generate electricity last year, analysts projected it would 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.
US production averaged 70.1 bcfd over the past 30 days, compared with 73.3 bcfd a year earlier and 72.3 bcfd for the same period in 2015, according to Reuters data. US exports, meanwhile, were up to 8.1 bcfd this week from 5.3 bcfd a year earlier. Analysts expect the United States to become a net exporter of gas on an annual basis this year or next for the first time since 1957.