US natural gas futures lost a few cents on Friday after falling to a fresh 2012 low on expectations for continued near-record production despite forecasts for more cold over the next two weeks. Front-month gas futures on the NYMEX closed down 2.8 cents at $2.691 per mmBtu. With the front-month down, some of the most active options were the $2 and $2.10 March 2015 puts.
The 12-month strip fell to its lowest since 2012, pushing the premium of calendar 2020 over the 12-month strip to the highest since 2013. Energy companies use the spread to determine where prices are likely to be in the future when making large investment decisions. Thomson Reuters Analytics forecast production in the US lower 48 states would hold over at 73.1 billion cubic feet per day, the same as Thursday.
That production is closing in on record highs and exceeds the 66.3 bcfd a year ago and the 30-day moving average of 72.2 bcfd. The latest Global Forecast System weather model for the lower 48 US states called for more cold over the next two weeks, with an expected 504 heating degree days. That compares with 484 HDDs forecast earlier Friday and the 431-HDD norm for this time of year. Consumption in the lower 48 was expected to jump to 104.1 bcfd on Monday from 91.8 bcfd on Friday. That compares with a norm of 90.2 bcfd for this time of year. The coldest weather was expected to come in early February, when demand will top 100 bcfd for five days, up from four days forecast earlier Friday.
With the cold, next-day gas prices in New York jumped to the highest since March. Net imports from Canada were expected to ease to 6.1 bcfd, the least since December, from 6.3 bcfd on Thursday. Exports to Mexico, meanwhile, were expected to hold at 1.6 bcfd, the same as Thursday. Imports from liquefied natural gas terminals were expected to rise to 0.6 bcfd from 0.5 bcfd on Thursday, with most gas coming from Elba in Georgia and Canaport in New Brunswick. Reuters Interactive Map showed the Grace Barleria LNG tanker was expected to arrive at GDF Suez's Everett LNG terminal in Massachusetts around February 3. The ship was last docked in Malta and Yemen. The Excelerate LNG tanker, meanwhile, docked near Excelerate's Northeast Gateway LNG terminal in the Boston harbour.