NEW YORK: US natural gas futures climbed about 2 percent to a two-week high on Friday on forecasts for cooler weather in late November, record gas flows to liquefied natural gas export plants and a drop in output in recent weeks.
Front-month gas futures for December delivery on the New York Mercantile Exchange rose 4.5 cents, or 2 percent, to USD2.992 per million British thermal units (mmBtu), putting the contract on track for its highest close since October 19.
For the week, the front-month was up about 3 percent after gaining about 10 percent last week.
Financial firm LSEG said average gas output in the US Lower 48 states fell to 111.6 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October and a monthly record high of 115.0 bcfd in August.
Record output and mild spring weather have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, with the level reaching a high of 7.7 percent above normal in April.
Hotter-than-normal weather over the summer, however, forced energy firms to pull more gas than usual from storage to fuel power plants to keep air conditioners humming, cutting the inventory surplus to just 1 percent above normal in mid October. About 40 percent of US power generation comes from gas-fired plants.
The return of mild weather and low demand in recent weeks has allowed energy firms to again add more gas to storage.
The amount of gas in storage likely climbed to 2.1 percent above normal during the week ended November 6, up from 1.4 percent above normal in the previous week, according to analyst estimates ahead of next Thursday’s weekly federal inventory report.
Looking ahead, meteorologists predicted weather across the country would remain warmer than normal through November 21, which should keep heating demand lower than usual in coming weeks.
Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 107.3 bcfd this week to 114.0 bcfd next week and 118.4 bcfd in two weeks. The forecast for this week was higher than LSEG’s outlook on Thursday.
Average gas flows to the nine major US LNG export plants rose to 18.8 bcfd so far in November, up from 18.4 bcfd in October and on track to tie the monthly record high of 18.8 bcfd in April.
On a daily basis, LNG feedgas was on track to reach a record 19.79 bcfd on Friday, just topping the current all-time daily high of 19.78 bcfd on October 18.
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