US natural gas futures climbed to a five-month high on Thursday on expectations for colder-than-normal weather over the next two weeks and after a government report showed last week's storage build was smaller than average. The US Energy Information Administration said utilities added 15 billion cubic feet of gas to storage in the week to November 3.
Although that increase matched analysts' forecasts in a Reuters poll, it fell well short of the 54 bcf injected during the same week a year ago and the five-year average build for the period of 45 bcf. Traders noted the build, which some think was the last weekly injection this year, was small due to rising exports and higher-than-usual heating demand. The amount of gas in stock is now about 2 percent below the five-year average. Front-month gas futures rose 2.5 cents, or 0.8 percent, to settle at $3.200 per million British thermal units, the highest close since May 26.
With Thursday's gain, the front-month rose for a sixth trading day in a row, its longest winning streak since March. Those price increases kept the front month in technically oversold territory with a relative strength index over 70 for a third day in a row for the first time also since March. Cold weather expected Friday caused next-day gas prices in New England to more than double to $8.02 per mmBtu, their highest since March.
High temperatures are only expected to reach 38 Fahrenheit (3 Celsius) in New York City on Friday down from over 50 degrees on Thursday, according to AccuWeather. Thomson Reuters forecast US gas consumption will rise to an average of 91.9 billion cubic feet day next week from 85.9 bcfd this week. That is up from Wednesday's forecasts of 91.8 bcfd for next week and 85.6 bcfd this week due primarily to higher heating demand.
Earlier this week, production in the lower 48 US states set a daily record of 76.4 bcfd, pushing the 30-day average output to an all-time high 74.7 bcfd, according to Reuters data. Some traders said utilities would likely start pulling gas out of storage this week for the first time this season due in part to colder-than-normal weather and higher gas exports. That would be about a week earlier than the five-year average for this time of year.
US gas exports overall are expected to average 9.4 bcfd this week, up 54 percent from a year ago, primarily the result of much higher shipments of liquefied natural gas, according to Reuters data. Even though the amount of gas in storage is a little less than usual for this time of year at around 3.8 trillion cubic feet, some traders said that should still be more than enough fuel to meet demand this winter, especially if the latest forecasts for the season are correct.
The US National Weather Service expects temperatures in December, January and February to be warmer than normal across much of the country again this year. The last two winters (2015-16 and 2016-17) were among the warmest on record.