US natural gas futures hit lowest since November

US natural gas futures fell on Friday to their lowest since November on forecasts for less-cold weather and lighter heating demand over the next two weeks and for the rest of the winter. Front-month gas futures fell 10.7 cents, or 3.4 percent, to settle at $3.034 per million British thermal units, their lowest close since November 23.
That was down about 24 percent from a recent high of $3.994 on December 28 and left the front-month down about 1 percent this week, its second consecutive weekly drop after the contract lost about 10 percent last week on warmer forecasts. So far, the November-through-March period is on track to be slightly colder than last year's record-warm winter but warmer than the 10- and 30-year averages.
Heating degree days have totalled 2,188 so far this season, versus 2,129 during the same period last winter, a 30-year average of 2,459 and a 10-year average of 2,398, according to Thomson Reuters data. US gas demand will slide to 93.9 billion cubic feet per day next week and 93.1 bcfd in two weeks from 97.0 bcfd this week as temperatures moderate, Thomson Reuters projected. Analysts said data would probably show utilities pulling 114 billion cubic feet of gas from storage during the week ending on February 10, the least since 2015. That compares with withdrawals of 136 bcf a year earlier and the five-year average of 156 bcf for that week.
Gas stockpiles are about 2 percent above the five-year average and will likely remain higher over the next several weeks if the warm winter forecasts prove correct. Longer term, however, analysts projected inventories will decline faster than usual this year despite weaker power demand due to rising exports and falling production.
After the power sector used a record amount of gas to generate electricity last year, analysts projected it would burn less in 2017 because prices of the fuel are expected to be about 25 percent higher, making coal a cheaper alternative for many generators. US production averaged 70.3 bcfd over the past 30 days, compared with 73.6 bcfd a year earlier and 72.9 bcfd for the same period in 2015, according to Reuters data.
US exports rose to 8.2 bcfd this week from 5.1 bcfd a year earlier, while imports fell to 8.4 bcfd from 9.8 bcfd. Analysts expect the United States to become a net exporter of natural gas on an annual basis this year or in 2018 for the first time since 1957.