US natural gas futures closed up on Friday posting its best week in a month, erasing losses in late trading for a second straight day on bets that cold weather will ultimately lift gas demand for heating. The US gas contract for October delivery finished up 1.3 cents, or 0.3 percent, at $3.984 per million British thermal units as it expired and went off the New York Mercantile Exchange.
November futures, the NYMEX's benchmark gas contract from Monday, settled up 1.5 cents, or 0.4 percent, at $4.03 per mmBtu. October futures gained nearly 4 percent on the week. It was the sharpest weekly gain since the end of August, sparked by fear that gas in storage may not reach 2013 levels when cold weather starts to spike in November.
But some analysts argued that gas at around $4 was still high for present conditions as weekly inventory builds were a lot more now than this time last year. Weather forecasts for coming days also weren't encouraging for gas consumption. Reflecting those concerns, October futures ended down 2 percent for the month and off 6 percent on the year. "We continue to see risk that the large seasonal storage injections of the next few weeks could drive nearby futures to new lows for the cycle," said Tim Evans, futures specialist at Citi Futures.
MDA Weather Services maintained a forecast of mild or mixed conditions that hinted at little need for air conditioning or heating over the next six to 10 days, suggesting a weaker outlook for gas. US weather models run by Thomson Reuters Analytics predicted heating degree days (HDDs) over the next two weeks would only reach 56, versus a normal of 80 this time of year.