US natural gas futures fell on Thursday on forecasts for less heating demand later in December than previously expected and a smaller-than-usual storage draw. The US Energy Information Administration said US utilities pulled just 69 billion cubic feet of gas from storage during the week ended on December 8.
While that withdrawal topped the 60-bcf consensus estimate from analysts in a Reuters poll, it was still the smallest decline for the week since 2015. It compared with a year-earlier decline of 132 bcf and a five-year average decrease of 78 bcf for that period. The decline cut stockpiles to 3.626 trillion cubic feet, just 0.7 percent below the 3.653 tcf five-year average for this time of year.
Front-month gas futures fell 3.1 cents, or 1.1 percent, to settle at $2.684 per million British thermal units. That is less than a penny over their lowest close since February 24. Prices have been trending toward new lows for most of December on moderating winter weather forecasts, record production and storage near normal levels.
Thomson Reuters analysts cut their projection for next week's US gas consumption to an average of 104.2 billion cubic feet per day from 106.4 bcfd on Wednesday on forecasts for less heating demand than previously expected. That compared with forecast usage of 110.6 bcfd during colder weather this week.
Included in the consumption projections are US exports to Mexico and Canada via pipeline and the rest of the world as liquefied natural gas. US sales abroad were projected to average 10.0 bcfd this week, up 37 percent from a year earlier. The first liquefied natural gas vessel was headed for Dominion Energy Inc's Cove Point LNG export facility in Maryland, a Reuters interactive map showed on Thursday, with the facility expected to enter service by the end of the year.
Production in the lower 48 US states averaged an all-time high of 76.2 bcfd over the past 30 days, according to Reuters data. Daily output peaked at the end of November at 76.8 bcfd and has remained near that level since. Even though the amount of gas in storage is a little less than usual for this time of year, traders said that should be more than enough to meet heating demand this winter, especially if production remains near record highs and the latest weather forecasts for the full season are correct.
The National Weather Service (NWS) projected temperatures in December, January and February would be seasonal across much of the country. The winters in 2015-2016 and 2016-2017 were among the warmest on record. The NWS projected heating degree days (HDDs) would total 2,358 during those months this winter. That compares with 2,097 HDDs during the same period last year, 2,079 two years ago and a 10-year average of 2,370. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 Celsius). The measure is used to estimate demand to heat homes and businesses.