US natural gas futures rise on small storage draw

US natural gas futures rose more than 2% on Thursday following the release of a federal report showing a smaller-than-usual weekly storage draw that was in line with estimates.

Traders noted prices had already traded higher on Thursday morning because the latest weather forecasts confirmed that next week would be much colder than this week, even though the outlook was for a little less cold in mid- December than previously expected.

The US Energy Information Administration (EIA) said utilities pulled just 19 billion cubic feet (bcf) of gas from storage during the week ended November 29.

That was a little lower than the 22-bcf draw analysts estimated in a Reuters poll and compares with a withdrawal of 62 bcf during the same week last year and a five-year (2014-18) average decline of 41 bcf.

The decrease last week cut stockpiles to 3.591 trillion cubic feet (tcf), 0.3% below the five-year average of 3.600 tcf for this time of year.

Analysts said stocks would likely return to a surplus over the five-year average during the next month or so as rising production enables utilities to leave more gas in storage.

Gas production in the US 48 states rose to 95.8 billion cubic feet per day (bcfd) on Wednesday from a two-week low of 94.9 bcfd on Tuesday, according to data provider Refinitiv. That compares with an average of 95.9 bcfd last week and a record high of 96.3 bcfd on November 30.

Front-month gas futures for January delivery on the New York Mercantile Exchange were up 5.6 cents, or 2.3%, to $2.455 per million British thermal units at 10:50 a.m. EST (1550 GMT).

Before the EIA released the storage report, the front-month was up 0.4%.

Meteorologists forecast the weather over much of the Lower 48 states will remain at near-normal levels through Dec. 10 before turning colder than usual through at least Dec. 20. That cold, however, is expected to be a little less intense than previously predicted.

Refinitiv projected average gas demand in the Lower 48 states, including exports, would rise to 121.2 bcfd next week from 115.3 bcfd this week. That is a little lower than Refinitiv's estimates on Wednesday of 121.7 bcfd for next week and 115.7 bcfd for this week.

Gas flows to liquefied natural gas (LNG) export plants slipped to a one-week low of 7.0 bcfd on Wednesday from 7.6 bcfd on Tuesday, according to Refinitiv data. That compares with an average of 7.3 bcfd last week and an all-time daily high of 7.9 bcfd on November 28.

Pipeline flows to Mexico, meanwhile, edged up to 5.3 bcfd on Wednesday from 5.2 bcfd on Tuesday, according to Refinitiv data. That compares with an average of 5.4 bcfd last week and an all-time daily high of 6.2 bcfd on September 18.