US natural gas futures on Thursday surged nearly 7 percent, the biggest daily percentage gain in two months, on expectations of stronger heating demand due to colder-than-normal weather in January. On the first day as the front month, gas futures for February delivery rose 18.2 cents, or 6.7 percent, to settle at $2.914 per million British thermal units. It was the biggest one-day percentage gain since October 30.
Prices hit a three-week high of $2.945 per mmBtu earlier in the session. "The weather forecasts are extremely bullish. We are already seeing huge demand numbers even over Christmas holidays," said Kyle Cooper, consultant for ION Energy in Houston. Thomson Reuters forecast US gas consumption will rise to an average of 136.3 billion cubic feet per day (bcfd) next week from 119 bcfd this week.
Included in the consumption projection are US exports to Mexico and Canada via pipeline and to the rest of the world as liquefied natural gas. US sales abroad were expected to average 9.9 bcfd this week, up about 32 percent from the same week a year ago. The market was little impacted by the weekly storage data from the US Energy Information Administration (EIA), which showed a storage withdrawal in line with market expectations, traders said.
"The market is focusing on weather, the 3-4 bcf missed today is nothing compared to the implications of the weather staying below normal through January," Cooper said. US utilities pulled 112 billion cubic feet of gas from storage during the week ended on Dec. 22, EIA reported on Thursday. That was in line with the 113 bcf draw analysts estimated in a Reuters poll and compares with a year-earlier decline of 233 bcf and a five-year average decrease of 111 bcf for that period.
The decline cut stockpiles to 3.332 trillion cubic feet, about 2.5 percent below the 3.417 tcf five-year average for this time of year. Although the amount of gas in storage is a little less than usual for this time of year, traders said there was more than enough fuel to meet heating demand this winter, especially if production remains near record highs and the latest weather forecasts for the full season are correct.
Production in the lower 48 US states averaged an all-time high of 76.7 bcfd over the past 30 days, according to Reuters data. Daily output peaked at 77.2 bcfd last week. The National Weather Service projected temperatures would remain mostly seasonal across much of the country in December, January and February. That follows two of the warmest winters on record in 2015-2016 and 2016-2017.
Comments
Comments are closed.