US natural gas futures fall to two-week low

US natural gas futures slipped to a two-week low on Wednesday on forecasts for less cold weather and lower heating demand next week than this week.

That decline comes even though the latest outlook through late November was colder than previously expected and analyst forecasts that utilities did not add or remove any gas from storage last week due to the extreme cold last week. Utilities usually add gas to storage at this time of year.

Front-month gas futures for December delivery on the New York Mercantile Exchange fell 2.1 cents, or 0.8%, to settle at $2.600 per million British thermal units, their lowest close since October 29.

The US National Weather Service (NWS) forecast temperatures in the Lower 48 US states would shift from colder-than-normal now to near-normal to warmer-than-normal over much of the country during the next 6-14 days.

The cold weather still blanketing the eastern half of the country, meanwhile, has boosted spot prices in the Northeast to their highest since last winter with next-day gas for Wednesday in New York City at its highest since January, power at the PJM West hub in the Mid Atlantic at its highest since February and gas and power in New England at its highest since March.

Data provider Refinitiv projected average gas demand in the Lower 48 states, including exports, would fall to 112.8 billion cubic feet per day (bcfd) next week from 117.1 bcfd this week.

Those demand forecasts, however, were higher than Refinitiv's predictions on Tuesday of 109.7 bcfd for next week and 116.2 bcfd for this week.

Gas flows to liquefied natural gas (LNG) export plants rose to 7.2 bcfd on Tuesday from 7.0 bcfd on Monday, according to Refinitiv data. That compares with an average of 7.1 bcfd last week and an all-time daily high of 7.7 bcfd on November 2.

Pipeline flows to Mexico rose to 5.6 bcfd on Tuesday from 5.3 bcfd on Monday, according to Refinitiv data. That compares with an average of 5.4 bcfd last week and an all-time daily high of 6.2 bcfd on September 18.

Analysts said utilities likely did not add or remove any gas from storage during the week ended Nov. 8. That compares with an injection of 42 bcf during the same week last year and a five-year (2014-18) average build of 30 bcf for the period.

If correct, stockpiles will remain at 3.729 trillion cubic feet (tcf), close to the five-year average of 3.730 tcf for this time of year.

Earlier this year, the amount of gas in inventory was as much as 33% below the five-year average in March. But record production allowed utilities to inject 2.569 tcf of gas into storage since April 1, turning the deficit into a surplus during the week ended Oct. 11. That was the second biggest amount of gas added during the April-October storage injection season, following 2014's record 2.727 tcf increase, according to federal data.

Gas production in the Lower 48 rose to 94.6 bcfd on Tuesday from 94.3 bcfd on Monday, according to Refinitiv data. That compares with an average of 94.7 bcfd last week and an all-time daily high of 95.2 bcfd on November 2.