US natural gas futures fall on less cold weather

US natural gas futures fell on Thursday to their lowest this month on less cold weather and lighter heating demand for the rest of the year. Front-month gas futures for January delivery on the New York Mercantile Exchange fell 10.6 cents, or 3 percent, to settle at $3.434 per million British thermal units. That was its lowest close since November 30. That decline came despite a bigger-than-expected storage draw.
The US Energy Information Administration said US utilities pulled 147 billion cubic feet (bcf) of gas out of storage during the colder-than-normal week ended December 9. That was the biggest withdrawal for the week since 2010 and pushed stockpiles below year-ago levels for the first time in two years. It compares with analysts' consensus estimate for a decline of 128 bcf in a Reuters poll and reductions of 42 bcf in the prior week, 46 bcf a year earlier and a five-year average decrease of 79 bcf.
Weather models projected temperatures will remain much colder than normal through December 20 before turning warmer than normal on December 21 through the end of the year. The freezing cold in the US Northeast this week pushed next-day power in New England to its highest since March 2025. But with the cold expected to moderate, Thomson Reuters forecast heating demand would soon decline, cutting projected US gas use to an average of 106.6 billion cubic feet per day (bcfd) next week from 107.2 bcfd this week. Demand this week was expected to be the highest since February.
Analysts forecast the amount of gas in storage, which until last week had remained at record highs since April, will likely fall below five-year average levels by the end of 2016, especially with US production stuck at its lowest level for this time of year since 2013. US production averaged 71.1 bcfd over the past 30 days, compared with 73.5 bcfd during the same period in 2015, 72.2 bcfd in 2014 and 66.9 bcfd in 2013, Reuters data showed. Output in the past week, however, was down to just 70.8 bcfd, due in part to maintenance work, even though prices in the Marcellus and Utica shale basins in Pennsylvania, Ohio and West Virginia were near their highest since November 2014.