US natural gas futures ended up over 5 percent on Friday, erasing Thursday's losses, on forecasts for colder-than-normal weather and strong heating demand over the next two weeks. After falling over 4 percent on Thursday, front-month gas futures on the New York Mercantile Exchange closed up 15.1 cents at $2.986 per million British thermal units.
Over the past two weeks, the front-month has traded in a wide range due to swings in weather forecasts, with prices rising or falling more than 5 percent in eight of the past nine trading days. Despite the higher front-month prices, some of the most-active NYMEX options on Friday were the $2.05 and $2 April 2015 puts, and the $2 May 2015 puts.
Thomson Reuters Analytics said the latest Global Forecast System (GFS) weather model for the lower 48 US states called for less cold but still below-normal temperatures over the next two weeks, with an expected 492 heating degree days. That fell short of the 510 forecast earlier Friday but still topped the 446-HDD norm for this time of year.
Consumption in the lower 48 states was expected to rise to 91.3 billion cubic feet per day (bcfd) on Monday from 89.3 bcfd on Friday. That compares with a norm of 90.9 bcfd for this time of year. The latest forecast still expects the coldest weather to come in early February when heating demand will push consumption over 100 bcfd between February 2-5. That was two fewer days that demand was expected to top 100 bcfd than earlier forecast. Production in the lower 48 US states was forecast to ease to 72.7 bcfd on Friday from 72.9 bcfd on Thursday. That compared with 66.9 bcfd a year ago and a 30-day moving average of 72.2 bcfd. Production peaked at 74.1 bcfd in December.