US natural gas futures ended the week higher on Friday on forecasts for the weather to turn cooler in two weeks, boosting the amount of fuel needed to heat homes and businesses. Front-month gas futures rose 4.2 cents, or 1.5 percent, to settle at $2.915 per million British thermal units. Despite the gain on Friday, the front-month fell about 3 percent for the week after rising nearly 5 percent last week.
Thomson Reuters forecast US gas consumption would jump to an average of 78.4 billion cubic feet per day (bcfd) as the weather turns seasonally cold in two weeks from a forecast 72.5 bcfd next week and 71.7 bcfd this week. Temperatures have been warmer than normal across much of the United States since early September and are expected to remain that way until at least the middle of next week.
Production in the lower 48 US states reached 74.9 bcfd earlier this week, its highest since September 2015, according to Reuters data. Over the past 30 days output has averaged 73.7 bcfd, up from 69.8 bcfd during the same period a year ago and in line with same time in 2015 when production was at a record high. Production was expected to reach a new monthly high in October, topping the current record set in April 2015, according to federal data.
US gas exports were expected to average 9.0 bcfd this week, up 76 percent from a year earlier, due primarily to rising shipments of liquefied natural gas, according to Reuters data. Analysts said utilities likely added a smaller than usual 67 bcf of gas into storage in the week to October 20, leaving the total amount of fuel in inventories about 1 percent below the five-year average for this time of year at around 3.7 trillion cubic feet (tcf).
That compares with a 74 bcf increase during the same week a year earlier and the five-year average build of 75 bcf for the period. Analysts forecast utilities will add just 1.7 trillion cubic feet (tcf) of gas into storage during the April-October injection season due in part to low output earlier in the year and rising sales abroad. That is much less than the 2.1 tcf seen on average over the past five years.
If correct, that would leave stockpiles at the end of October at around 3.8 tcf versus a record high of 4.0 tcf on October 31 last year and a five-year average (2012-2016) of 3.9 tcf. Some traders and analysts, however, noted utilities would likely continue adding gas into storage through the middle of November, boosting total stocks to around 3.9 tcf, which is near the five-year average for the annual peak.