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Markets

US natgas futures rise to 1-week high on colder forecasts

  • Front-month gas futures rose 2.8 cents, or 1.0%, to $2.867 per million British thermal units.3
  • Refinitiv projected average gas demand, including exports, would drop from 112.2 bcfd this week to 105.0 bcfd next week as the weather turns seasonally milder.
Published March 3, 2021

US natural gas futures rose to their highest in a week on Wednesday on forecasts for colder weather and higher heating demand than earlier expected.

In addition, traders noted gas flows to US liquefied natural gas (LNG) exports plants was also on track to rise back to near record highs next week.

Front-month gas futures rose 2.8 cents, or 1.0%, to $2.867 per million British thermal units at 8:36 a.m. EST (1336 GMT), putting the contract on track for its highest close since Feb. 23.

Data provider Refinitiv said output in the Lower 48 US states averaged 90.5 billion cubic feet per day (bcfd) so far in March. That compares with a 28-month low of 86.5 bcfd in February when extreme weather froze gas wells and pipes in Texas and an all-time monthly high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would drop from 112.2 bcfd this week to 105.0 bcfd next week as the weather turns seasonally milder. Those forecasts were higher than Refinitiv projected on Tuesday.

The amount of gas flowing to US LNG export plants, meanwhile, averaged 10.1 bcfd so far in March. That compares with a four-month low of 8.5 bcfd in February as extreme cold cut power and gas supplies and a monthly record high of 10.7 bcfd in December.

Buyers around the world continue to purchase near record amounts of US gas because prices in Europe and Asia remain high enough to cover the cost of shipping the US fuel across the oceans.

Traders, however, noted US LNG exports cannot rise much more until new units enter service in 2022 since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants can pull in a little more gas than they can export since they use some of the fuel to run the facility.

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