US natural gas futures on Thursday fell to their lowest level since mid-November after a smaller-than-expected storage draw and forecasts for warmer weather over the next two weeks. The US Energy Information Administration said utilities pulled 114 billion cubic feet of gas from storage during the week ended February 10, the least since 2015.
That compares with analysts' consensus estimate for a draw of 124 bcf and declines of 136 bcf a year earlier and the five-year average of 156 bcf for that week. Front-month gas futures fell 7.1 cents, or 2.4 percent, to settle at $2.854 per million British thermal units, its lowest close since November 18. That decline kept the front-month in technically oversold territory for a fourth day in a row, its longest streak since October. It also pushed the contract down about 29 percent from a recent two-year high of $3.994 on December 28, making gas a cheaper fuel than coal for many power generators.
The latest weather models forecast warmer-than-normal temperatures would continue through at least the beginning of March. So far, the November-through-March period is in line with last year's warm winter. But with meteorologists expecting a colder March than a year earlier, they still see this winter being slightly cooler than last year's.
Heating degree days have totaled 2,307 so far this season, versus 2,309 during the same period last winter, a 30-year average of 2,615 and a 10-year average of 2,555, according to Thomson Reuters data. US gas demand will slide to 91.2 billion cubic feet per day this week and 81.2 bcfd next week from 96.9 bcfd last week as temperatures increase, Thomson Reuters projected.
Gas stockpiles are about 2 percent above the five-year average and will probably remain so for the next several weeks if warm winter forecasts prove correct. Longer term, however, analysts projected inventories would decline faster than usual this year as rising exports and falling production offset weaker power demand.
US production averaged 70.3 bcfd over the past 30 days, compared with 73.9 bcfd a year earlier and 73.1 bcfd for the same period in 2015, according to Reuters data. US exports jumped to 8.1 bcfd this week from 5.5 bcfd a year earlier, while imports fell to 8.9 bcfd from 9.9 bcfd. Analysts expect the United States to become a net exporter of natural gas on an annual basis this year or in 2018 for the first time since 1957.