US natural gas futures on Tuesday rose on forecasts for slightly cooler, but still warmer-than-normal weather in the next two weeks. After falling to its lowest level since late November on Monday, front-month gas futures for March delivery on the New York Mercantile Exchange rose 8.0 cents, or 2.6 percent, to settle at $3.130 per million British thermal units.
Even though that was its biggest daily percentage gain since January 12, the front-month remained down about 10 percent from a recent high on January 26 due to warmer-than-normal forecasts expected to last through the end of the winter.
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 have totaled 2,123 so far this season, versus 2,052 during the same period last winter, a 30-year average of 2,379 and a 10-year average of 2,317, according to Thomson Reuters data. US gas demand will slide to 95.3 billion cubic feet per day this week and 92.4 bcfd next week from 100.7 bcfd last week as temperatures moderate, Thomson Reuters projected.
Analysts said utilities likely pulled 151 billion cubic feet of gas from storage during the cold week ended February 3, the most since 2015. That compares with declines of 93 bcf a year earlier and the five-year average of 138 bcf for that week.
Even though storage levels are currently over the five-year average, analysts have projected inventories will decline faster than usual this year despite weaker power demand, in part because exports are higher and production is lower.
After the power sector used a record amount of gas to generate electricity last year, analysts projected it would 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 70.2 bcfd over the past 30 days, compared with 73.5 bcfd a year earlier and 72.7 bcfd for the same period in 2015, according to Reuters data.