HomeNewsU.S. natural gas up more than 3% to 1-week high as weather turns colder

U.S. natural gas up more than 3% to 1-week high as weather turns colder

12/9/2024

U.S. natural gas futures rose > 3% to more than a one-week high on Monday, helped by a shift in short-term forecasts to cooler weather that would lead to increased gas demand for heating.

Front-month gas futures for January delivery on the New York Mercantile Exchange were up 12 cents, or 3.9%, to $3.20 per million British thermal units (MMBtu).

"Weather outlook for later in the month shifted significantly colder for the northeastern U.S., a key region for natural gas demands. That shift added to potential withdrawal projections and is helping support a push to the higher end of the range near $3.30," said Gary Cunningham, director of market research at Tradition Energy.

The U.S. Energy Information Administration (EIA) said utilities pulled 30 Bft3 of gas out of storage during the week ended Nov. 29. Early estimates for the week ending Dec. 6 ranged from withdrawals of 49 Bft3 to 187 Bft3, with an average decrease of 138 Bft3. That compares with a withdrawal of 72 Bft3 during the same week last year and a five-year average decrease of 71 Bft3.

"Much of this strength appears to represent another expected Arctic blast at about the middle of this week that will be prompting a larger-than-normal storage withdrawal next week that is apt to follow a sizable reduction in the surplus per this week's data," said Jim Ritterbusch of Ritterbusch and Associates in Florida. "However, we are not expecting much upside follow through beyond today's high because of another warm-up in the weather forecasts next week and possibly into the holiday period ... some production slippage and steady export activity may be adding to today's gains but don't appear sufficient to spur additional strength unless accompanied by disrupted output due to freeze-offs."

LSEG estimated 355 heating degree days (HDDs) over the next two weeks, lower than the forecast of 368 HDDs on Friday. It forecast that the average gas demand in the Lower 48, including exports, would drop from 130.5 Bft3d this week to 126.7 Bft3d next week.

The amount of gas flowing to the seven big operating U.S. LNG export plants has risen to an average of 14.2 Bft3d so far in December, up from 13.6 Bft3d in November. That compares with a monthly record high of 14.7 Bft3d in December 2023.

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 102.7 Bft3d so far in December, up from 101.5 Bft3d in November. That compares with a record 105.3 Bft3d in December 2023.

"We are also seeing some support for prices from hedging by European buyers who see the regime change in Syria as additional risk to supplies from a regional unrest perspective," Cunningham added.

 

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