US natural gas futures ended down 3 percent on Thursday on reports of a weaker-than-expected storage draw despite forecasts for continued cold weather over the next two weeks. Front-month gas futures on the New York Mercantile Exchange closed down 8.4 cents at $2.713 per million British thermal units. Among the most active options were the $4.50 April 2015 calls and the $2 March, April and June 2015 puts.
On the Intercontinental Exchange, next-day power in New England and gas in New York climbed to the highest since March due to the cold, making it cheaper to burn residual fuel and heating oil rather than gas to generate power. The US Energy Information Administration said utilities pulled 160 billion cubic feet of gas from storage last week, less than the 168-bcf draw analysts estimated in a Reuters poll.
That topped the 115-bcf draw in the prior week, but fell short of the 178-bcf five-year average draw and the 234-bcf draw in the same week a year earlier. Thomson Reuters Analytics said the latest Global Forecast System weather model for the lower 48 US states called for continued cold over the next two weeks, with an expected 531 heating degree days (HDDs). That compares with 541 HDDs forecast earlier Thursday and the 392-HDD norm for this time of year.
Consumption was expected to rise to 101.5 billion cubic feet per day on Friday, the most since mid-January, from 95.0 bcfd Thursday. That compared with a norm of 86.1 bcfd for this time of year. The coldest weather was expected to come over the next two weeks when demand will top 100 bcfd for 10 days, down from 11 earlier Thursday. Production in the Lower 48 states was expected to edge up to 73.6 bcfd from 73.5 bcfd Wednesday. That compared with 66.1 bcfd a year ago and an all-time high of 74.5 bcfd set in December.
Net imports from Canada were expected to ease to 5.8 bcfd from 6.0 bcfd on Wednesday. Exports to Mexico were expected to rise to 1.7 bcfd from 1.6 bcfd Wednesday. Imports from liquefied natural gas terminals in the United States and Canada were expected to hold at 0.8 bcfd, the same as Wednesday, with most from Elba in Georgia and Canaport in New Brunswick. Reuters Interactive Map showed the Matthew LNG tanker was moving toward the US Northeast/Canadian Maritimes.