US natural gas futures jumped to their highest level in a week on Thursday on a smaller-than-expected storage build and as the November contract moved into front-month status. The US Energy Information Administration said utilities added 58 billion cubic feet of gas into storage during the week ended September 22.
That was less than the 66-bcf build analysts forecast in a Reuters poll. It also surpassed the 49-bcf increase in the same week a year ago and a five-year average rise of 84 bcf for that period. The build leaves inventories about 1 percent above the five years average for this time of year. On their first day as the front-month, futures for November delivery gained 4.3 cents, or 1.4 percent, to settle at $3.017 per million British thermal units, their highest close since September 20.
Thomson Reuters projected US gas consumption would rise to 74.3 billion cubic feet per day this week from 72.8 bcfd last week as consumers crank up their air conditioners during what is forecast to be a last blast of summer-like weather. Next week, however, gas usage is expected to drop to a still higher-than-normal 69.9 bcfd with milder temperatures.
Production in the lower 48 US states rose to an average 73.9 bcfd over the past 30 days, up from 71.0 bcfd a year earlier. That was still short of the 74.4 bcfd during the same period in 2015, when output was at a record high, Reuters data showed. US exports were expected to average 8.2 bcfd this week, up 49 percent from a year earlier due primarily to higher liquefied natural gas shipments abroad, according to Reuters data.
Though stocks were near normal for this time of year, utilities were expected to add just 1.7 trillion cubic feet of gas during the April-October injection season because of relatively low output earlier this year and rising sales abroad, analysts said.
The projected build, which is less than the five-year average of 2.1 tcf, would leave inventories at about 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. Some analysts said gas prices could spike later in the year if inventories decline quickly when consumers start heating their homes and businesses and if the coming winter is colder than the past two, which were among the warmest on record. In their latest forecasts, meteorologists predicted temperatures would be near normal in November, January and February and warmer than average in December.