US natural gas futures rise on cooler weather outlook ahead of contract expiry

NEW YORK: US natural gas futures rose more than 2percent on Friday on expectations of cooler temperatures boosting demand and positioning ahead of the expiry of the front-month contract.

Front-month gas futures for April delivery on the New York Mercantile Exchange rose 5.6 cents, or about 2percent, to USD3.06 per million British thermal units, reaching the highest level since March 23.

However, the front-month was down 1.3percent so far this week. The contract expires on Friday.

“The prompt gas switch continues to strengthen ahead of today’s April contract expiration in sending off some strong near-term bullish vibrations,” said analysts at Ritterbusch and Associates in a note.

“While some of this price up-spike may be in sympathy with today’s gains in the oil, some adjustments in the short-term weather outlooks favoring cooler temperatures beyond next week are also prompting buying interest.”

LSEG projected average gas demand in the Lower 48 states, including exports, at 109.9 bcfd this week and 109.9 bcfd next week.

“A growing concern that the combination of a prolonged interruption of LNG supplies from Qatar will lead to US facilities forgoing spring maintenance is starting to provide support,” said Gary Cunningham, director of market research at Tradition Energy.

Qatar, the world’s biggest LNG producer, has declared force majeure on all of its LNG output after being attacked as part of the US-Israeli war with Iran.

Iranian attacks have knocked out 17percent of Qatar’s LNG export capacity, causing an estimated USD20 billion in lost annual revenue and threatening supplies to Europe and Asia, QatarEnergy’s CEO and state minister for energy affairs told Reuters on Thursday.

“We expect the May contract to trade in a fairly tight band over the next week. We are already testing resistance at USD3.02, a break through it will take us to the next consolidation level near USD3.09 while support will be found just above USD2.90,” Cunningham says.

Energy companies pulled 54 billion cubic feet of gas from stockpiles during the week ended March 20, the US Energy Information Administration said on Thursday.

That was more than the 44 bcf draw forecast by analysts in a Reuters poll and compared with an injection of 33 bcf in the same week a year ago.