US natural gas futures traded within a few cents of unchanged on Friday despite forecasts for much colder weather and more heating demand during the last week of October.
Traders said prices held steady even though inventories surpassed the five-year average for the first time in over two years and forecasts for lower than previously expected heating demand next week.
Front-month gas futures for November delivery on the New York Mercantile Exchange were down 1.7 cents, or 0.7%, to $2.301 per million British thermal units at 8:38 a.m. EDT (1238 GMT).
For the week, the front-month was on track to rise about 4%, putting it up for the first time in five weeks.
Recent price swings in gas futures pushed at-the-money implied volatility, a determinant of option premiums, to 51.1% on Thursday, its highest since January. Over the past year, implied volatility has swung wildly, hitting a record high of 117.5% in November and a record low of 18.6% in April.
Over the next 6-14 days, the US National Weather Service forecast temperatures in the Lower 48 US states would remain colder than usual over much of the country except for a patch of warm in the Southwest.
Refinitiv projected average gas demand in the Lower 48 states, including exports, would rocket to 96.5 billion cubic feet per day (bcfd) during the last week of October as colder weather blankets much of the country, up from an average of 85.5 bcfd next week.
That demand expectation for next week was down from Refinitiv's previous 86.3 bcfd forecast.
Gas flows to liquefied natural gas (LNG) export plants was expected to rise to a record 7.2 bcfd on Friday with an increase in flows to Cheniere Energy Inc's Corpus Christi terminal in Texas, up from 6.2 bcfd on Thursday. That compares with an average of 6.3 bcfd last week.
Pipeline flows to Mexico eased to 5.2 bcfd on Thursday from 5.5 bcfd on Wednesday, according to Refinitiv data. That compares with an average of 5.5 bcfd last week and an all-time daily high of 5.9 bcfd on September 18.
Analysts said utilities likely added a bigger-than-usual 91 billion cubic feet (bcf) of gas to storage during the week ended Oct. 18. That compares with an injection of 62 bcf during the same week last year and a five-year (2014-18) average build of 73 bcf for the period.
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