US natgas scales near two-year peak on higher demand outlook

US natural gas futures climbed to their highest in nearly two years on Monday on forecasts for higher heating demand and concerns that a storm could disrupt Gulf Coast production.

Front-month gas futures rose 8.8 cents, or 3%, to $3.059 per million British thermal units (mmBtu) by 9:44 a.m. EDT. Prices earlier rose to their highest since Jan. 25, 2019 at $3.080 per mmBtu.

"We are seeing some very cold weather temperatures that will be coming across in the next week, so we are going to see some very strong demand," said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

Data provider Refinitiv predicted 212 heating degree days (HDDs) over the next two weeks in the Lower 48 US states, higher than the 30-year normal of 204 HDDs.

HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to heat homes and businesses.

Refinitiv projected average demand would jump from 97 bcfd this week to 97.4 bcfd next week.

Concerns that Tropical Storm Zeta, which was poised to turn into a hurricane as it approached the Gulf of Mexico, would disrupt oil and gas production, was also fuelling price gains, Flynn said.

Chevron Corp and BP have evacuated staff from their US Gulf of Mexico offshore facilities ahead of the storm.

US output in the Lower 48 US states was at 87.6 billion cubic feet per day (bcfd) on Sunday, Refinitiv said.