U.S. natgas rises on record LNG exports, higher demand views

U.S. natural gas futures rose on Monday on record liquefied natural gas (LNG) exports and forecasts for slightly higher demand this week, while the possibility of an early start to the injection season partly limited gains.

On their last day as the front-month, gas futures for April delivery on the New York Mercantile Exchange rose 2.9 cents, or 1.1%, to settle at $2.586 per million British thermal units.

"Natural gas is getting a bounce partly because of increased demand expectations and concerns over the delay of LNG shipments, because of the Suez Canal," said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

"Some of the power outages we saw from Texas are ending, so we are seeing more electricity demand. So a combination of those factors are giving a little bit of support."

Shipping traffic through Egypt's Suez Canal has resumed after the refloating of a giant container ship that had been blocking the busy waterway for almost a week.

Data provider Refinitiv estimated 181 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states. The normal number for this time of year is 213 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 gas demand, including exports, would rise to 99.2 bcfd this week from 97.5 bcfd in the prior week.

The amount of gas flowing to U.S. LNG export plants, meanwhile, has averaged 10.7 bcfd so far in March.

That compares with a four-month low of 8.5 bcfd in February, when extreme cold cut power and gas supplies to the facilities, and puts feedgas on track to match the monthly record of 10.7 bcfd in December.

Buyers around the world continue to purchase near-record amounts of U.S. gas because prices in Europe and Asia remain high enough to cover the cost of buying and transporting the U.S. fuel across the ocean.

However, there is "market anticipation of a possible storage injection to be announced this Thursday. If so, then this year's injection season will start one week earlier than usual, which indicates a somewhat bearish news to the market", said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.

Output in the Lower 48 has averaged 91.1 billion cubic feet per day (bcfd) so far in March, up sharply from a 28-month low of 86.5 bcfd in February.

That, however, was still much lower than the record monthly high of 95.4 bcfd in November 2019.