US natural gas futures on Thursday were nearly unchanged for an eighth straight day despite a slightly bigger than expected storage draw and mixed forecasts calling for warmer than normal to seasonal weather over the next two weeks. The US Energy Information Administration said utilities pulled 211 billion cubic feet of gas out of storage during the week ended January 22, the biggest draw since last February.
That was slightly bigger than the 207 bcf draw analysts estimated in a Reuters poll, and compares with draws of 178 bcf in the prior week, 112 bcf a year earlier and a five-year average of around 170 bcf for the week. After trading higher for six days in a row, front-month gas futures on the New York Mercantile Exchange closed up 0.7 cents at $2.182 per million British thermal units with the arrival of March as the prompt month.
The latest US weather model pointed to seasonably cold weather over the next two weeks, while the European model continued to show the weather would remain warmer than normal during that time. For the rest of the winter, meteorologists forecast the weather will be about 17 percent warmer than normal in both February and March due to the effect of the El Nino weather pattern.
Even though heating demand has been 13 percent below normal so far this winter and 17 percent warmer than the polar vortex of 2014-2015, gas usage was the same as last year and 7 percent higher than usual, according to data from Thomson Reuters Analytics. The power sector is burning record amounts of gas to generate electricity since the fuel remains relatively cheap compared with coal, which carries higher environmental and transport costs.
So far this month, the power sector has burned on average 25.6 billion cubic feet of gas per day, according to Thomson Reuters Analytics, putting it on track to top the record 23.0 bcfd it burned last January. Traders have said it makes sense for generators to burn gas instead of coal when the gas premium over coal is less than $1 per mmBtu, as it has been since August and most of the rest of 2015.