US natural gas futures surged over 6 percent on Thursday after a federal report showed record withdrawal from storage amid forecasts for colder weather and higher heating demand next week than previously expected. Front-month gas futures for February delivery rose 17.8 cents, or 6.1 percent, to settle at $3.084 per million British thermal units. The rise boosted the premium of February futures over March to their highest since at least January 2011, according to Reuters data.
The US Energy Information Administration (EIA) said utilities pulled a record 359 billion cubic feet of gas from storage during the frigid week ended on January 5, according to federal data going back to 1994. That topped the 333-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of 151 bcf a year earlier and a five-year average decrease of 162 bcf.
The decline cut stockpiles to 2.767 trillion cubic feet, 12.1 percent below the 3.149 tcf five-year average for this time of year and the lowest total gas in storage for that week since 2008. Thomson Reuters analysts on Thursday increased their forecast for gas demand in the lower 48 US states for next week to around 124.5 billion cubic feet per day from 120.9 bcfd as the weather is now expected to turn colder. That compares with a projected 112.4 bcfd this week.
Included in the consumption outlook are US exports to Mexico and Canada via pipeline and the rest of the world as liquefied natural gas. US sales abroad are projected to average 9.3 bcfd this week, up 13 percent from a year earlier. As temperatures warm, allowing freezing wells to return to service, Thomson Reuters projected production in the lower 48 US states would increase to 74.5 bcfd on Thursday from as low as 71.1 bcfd last week when the cold reduced output by as much as 8 percent from the record high of 77.5 bcfd on December 26.
Traders said supplies were more than adequate to meet heating demand this winter, especially if production remains near record highs and the latest weather forecasts for the rest of the season are correct.
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