NEW YORK: US natural gas futures held near a two-week high in volatile trade ahead of contract expiration and forecasts for colder weather and higher heating demand over the next two weeks than previously expected.
On its last day as the front-month, gas futures for November delivery on the New York Mercantile Exchange rose 0.6 cent, or 4 0.2%, to $3.220 per million British thermal units (mmBtu) at 12:26 p.m. EDT (1626 GMT), putting the contract up for a fifth day in a row and on track for its highest close since Oct. 12 for a second day in a row.
Earlier in the session, the front-month was up about 6%.
Front-month prices are often extremely volatile ahead of expiration - November futures jumped by about 7% on Thursday and were up over 5% earlier on Friday - due in part to low volumes. There were only 3,197 November futures traded so far on Friday, down from an average of 129,500 front-month contracts traded daily since the start of the year.
Futures for December, which will soon be the front-month, were up about 2% to $3.54 per mmBtu. For the week, the front-month was up about 11% after falling about 10% last week.
Financial firm LSEG said average gas output in the Lower 48 US states rose to an average of 103.9 billion cubic feet per day (bcfd) so far in October, up from 102.6 bcfd in September and a record high of 103.1 bcfd in July.
Meteorologists forecast the weather would turn from warmer than normal now to colder than normal from Oct. 29-Nov. 2 before becoming mostly near normal from Nov. 3-11.
Next week will be extremely cold in some parts of the country like Denver where AccuWeather meteorologists forecast Sunday will be snowy with a high of just 26 degrees Fahrenheit (minus 3 Celsius). That compares with a normal high of 63 F (17 C)in Denver at this time of year.
LSEG forecast US gas demand in the Lower 48 states, including exports, would jump from 97.6 bcfd this week to 108.2 bcfd next week as cold weather boosts heating demand before sliding to 107.3 bcfd in two weeks with the return of milder, but still seasonally cool, weather.
The forecast for next week was higher than LSEG’s outlook on Thursday.
Pipeline exports to Mexico slid to an average of 6.9 bcfd so far in October, down from a monthly record high of 7.2 bcfd in September.
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