US natural gas futures fell for the third week in a row, hitting their lowest since June 2012, as near-record production trumped expectations for more cold over the next two weeks. Front-month gas futures on the New York Mercantile Exchange closed down 2.1 cents at $2.579 per million British thermal units. Some of the most active options were the $2 May and May 2015 puts.
The discount of the March 2015 futures below April 2015, the so-called widow maker, widened to the most since 2008. Forecasts of near-record production, meanwhile, helped push the 12-month strip to its lowest since June 2012, propelling the premium of calendar 2020 over the 12-month strip to the highest since January 2013. Calendar year 2016 fell to the lowest since 2011.
On the Intercontinental Exchange, next-day gas at the Henry Hub benchmark in Louisiana, Chicago and the Southern California Border all fell to fresh 2012 lows. Thomson Reuters Analytics said the latest Global Forecast System weather model for the lower 48 US states called for similar cold over the next two weeks, with an expected 481 heating degree days.
That compared with 483 HDDs forecast earlier Friday, 466 HDDs forecast on Thursday and the 412-HDD norm for this time of year. Production in the lower 48 was expected to ease to 73.6 billion cubic feet per day from a near-record 74.2 bcfd on Thursday. That compared with 65.9 bcfd a year ago and an all-time high of 74.5 bcfd set in December. Consumption in the lower 48 was expected to fall to 83.2 bcfd on Monday from 99.0 bcfd Friday. That compared with a norm of 88.7 bcfd for this time of year.
Net imports from Canada were expected to fall to 6.0 bcfd, their lowest since December, from 6.5 bcfd Thursday. Exports to Mexico, meanwhile, were expected to ease to 1.7 bcfd from 1.9 bcfd Thursday. Imports from liquefied natural gas (LNG) terminals were expected to fall to 1.1 bcfd on Friday from 2.0 bcfd on Thursday, with most from Canaport in New Brunswick, Cove Point in Maryland and Elba in Georgia.