US natural gas futures rise for colder weather

US natural gas futures edged higher on Wednesday on forecasts for colder weather and higher heating demand over the next two weeks than previously expected.

Meteorologists projected temperatures in the US Lower 48 states will remain colder than normal from Dec. 15-22 before turning near normal to warmer from December 23-26.

That compares with Tuesday's outlook calling for the weather to fluctuate between warmer and colder than normal through Dec. 20 before turning solidly warmer from December 21-25.

Front-month gas futures for January delivery on the New York Mercantile Exchange (NYMEX) were up 2.6 cents, or 1.2%, at $2.290 per million British thermal units at 8:12 a.m. EST (1312 GMT).

Total volume on the NYMEX rose to 741,260 contracts on Dec. 9, the highest since January. That was the day the front-month fell over 4% to its lowest close since October 11.

With cooler weather coming, data provider Refinitiv projected demand in the Lower 48 states, including exports, would rise to an average of 128.2 billion cubic feet per day (bcfd) next week from 117.9 bcfd this week.

That is much higher than Refinitiv's forecasts on Tuesday of 123.6 bcfd for next week and 117.0 bcfd for this week.

Gas flows to liquefied natural gas (LNG) export plants rose to 8.1 bcfd on Tuesday from 7.9 bcfd on Monday, according to Refinitiv data. That compares with an average of 7.6 bcfd last week and an all-time high of 8.2 bcfd on Dec. 8 with the ramp up of new trains at Freeport LNG's plant in Texas and Cameron LNG's plant in Louisiana.

Separately, traders said Kinder Morgan Inc's Elba Island LNG export plant in Georgia could send out its first cargo this week.

Pipeline flows to Mexico, meanwhile, rose to 5.6 bcfd on Tuesday from 5.1 bcfd on Monday, according to Refinitiv data. That compares with an average of 5.3 bcfd last week and an all-time daily high of 6.2 bcfd on September 18.

Analysts said utilities likely pulled 82 billion cubic feet (bcf) of gas from storage during the week ended Dec. 6. That compares with a withdrawal of 75 bcf during the same week last year and a five-year (2014-18) average decline of 68 bcf.

If correct, the decrease would cut stockpiles to 3.509 trillion cubic feet (tcf), 0.7% below the five-year average of 3.532 tcf for this time of year.

Analysts said stocks would likely return to a surplus over the five-year average during the next month or so as rising production enables utilities to leave more gas in storage.

Gas production in the Lower 48 states fell to a three-week low of 94.8 bcfd on Tuesday due mostly to a decline in output in Texas, down from 95.6 bcfd on Monday, according to Refinitiv.