US natgas hits 21-month high on roll to higher-priced December contract

US natural gas futures jumped to a 21-month high on Thursday with a roll into the higher priced December contract.

Traders noted, however, that the new December front-month was down about 4% from where it was trading on Wednesday due in part to a second day of 5% declines in crude futures and forecasts for less cold weather and heating demand over the next two weeks than earlier expected.

Gas futures have been trading near their highest since January 2019 over the past week or so on rising liquefied natural gas (LNG) exports and declining output due to hurricane outages and as low prices earlier in the year caused producers to drill less.

Thursday's price action came ahead of a federal report expected to show what could be the last weekly storage injection of the year.

Analysts said US utilities likely injected 37 billion cubic feet (bcf) of gas into storage in the week ended Oct. 23. That compares with an increase of 89 bcf during the same week last year and a five-year (2015-19) average build of 67 bcf.

If correct, the increase would bring stockpiles to 3.963 trillion cubic feet (tcf), 8.1% above the five-year average of 3.666 tcf for this time of year.

On its first day as the front-month, gas futures for the most active December contract fell 9.9 cents, or 3.0%, from where it closed on Wednesday to $3.192 per million British thermal units at 10:08 a.m. EDT (1408 GMT). That puts the contract up about 6% from where the November contract closed on Wednesday and on track for its highest close since January 2019.

Oil prices fell over 5% to their lowest since May on the potential impact renewed coronavirus lockdowns will have on oil demand.