US natural gas futures on Monday fell to their lowest level in over a week on forecasts for temperatures to moderate over the next two weeks and remain warmer than normal through March. On their first full day as the front-month, gas futures for March delivery on the New York Mercantile Exchange fell 12.6 cents, or 3.6 percent, to settle at $3.232 per million British thermal units, the lowest close since January 20.
So far, the November-through-March period is on track to be slightly colder than last year's record-warm winter but hotter than the 10- and 30-year averages.
Heating degree days totaled 1,929 so far this season, versus 1,872 during the same period last winter, a 30-year average of 2,158 and a 10-year average of 2,069, according to Thomson Reuters data.
Long-term, those warmer-than-normal winter forecasts pushed futures into contango through August with the premium of April 2017 over March 2017 rising to its highest level since the contracts started trading in 2008.
Thomson Reuters projected US gas demand would rise to 101.6 billion cubic feet per day (bcfd) this week before easing to 101.3 bcfd next week from 90.6 bcfd during the warmer-than-normal weather last week.
Analysts said utilities likely pulled about 92 billion cubic feet of gas from storage during the warmer-than-usual week ended on January 27, the least for that week since 2006.
That compared with withdrawals of 169 bcf a year earlier and the five-year average of 166 bcf for that week.
Analysts said they expected the amount of gas in storage to decline faster than normal this year, in part because exports are higher and production is lower despite weaker power demand for the fuel.
After the power sector used a record amount of gas to generate electricity last year, analysts project it will burn less in 2017 because prices of the fuel are expected to be about 25 percent higher, making coal a cheaper alternative for many generators.
US production averaged 70.4 bcfd over the past 30 days, compared with 73.1 bcfd a year earlier and 72.2 bcfd for the same period in 2015, according to Reuters data.
US exports, meanwhile, were up to 8.2 bcfd this week from 5.3 bcfd during the same week a year ago. Analysts expect the United States to become a net exporter of gas on an annual basis this year or next for the first time since 1957.