US natural gas futures slipped on Wednesday on forecasts for warmer weather over the next two weeks that is expected to reduce the amount of gas burned for heating. Traders also noted US output hit a record daily high this week. Front-month gas futures fell 5.5 cents, or 1.8 percent, to settle at $2.919 per million British thermal units.
Thomson Reuters forecast homes and businesses would use less gas next week than previously forecast. US gas consumption was now projected to average 81.5 billion cubic feet per day (bcfd) next week, down from an earlier forecast of 82.8 bcfd. That is still up from this week's forecast of 72.4 bcfd because the weather is expected to turn colder than normal during the first week of November.
US gas exports, meanwhile, were expected to average 9.0 bcfd this week, up 76 percent from a year earlier, due primarily to rising shipments of liquefied natural gas, according to Reuters data. Analysts said utilities likely added a smaller-than-usual 65 bcf of gas into storage in the week to Oct. 20, which would leave the total amount of fuel in inventory about 1 percent below the five-year average for this time of year at around 3.7 trillion cubic feet (tcf).
That compares with an increase of 74 bcf during the same week a year earlier and the five-year average build of 75 bcf for the period. Analysts forecast utilities will add just 1.7 trillion cubic feet (tcf) of gas into storage during the April-October injection season due in part to low output earlier in the year and rising sales abroad. That is much less than the 2.1 tcf seen on average over the past five years.
If correct, that would leave stockpiles at the end of October at around 3.8 tcf versus a record high of 4.0 tcf on Oct. 31 last year and a five-year average (2012-2016) of 3.9 tcf. Some analysts, however, noted utilities would likely continue adding gas into storage through the middle of November, boosting total stocks to around 3.9 tcf, which is near the five-year average for the annual peak.
Traders said that should be enough gas to meet demand this winter because the US National Weather Service expects temperatures in December, January and February to be warmer than normal across much of the country again this year.
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