CHICAGO: US natural gas futures rose about 3% to a one-week high on Thursday on lower output, rising liquefied natural gas (LNG) exports and higher gas prices overseas that will keep demand for US LNG strong.
Traders said prices rose despite forecasts for mild weather to continue through the end of October and ahead of a government report expected to show last week’s storage build was bigger than usual for a fifth week in a row.
Analysts forecast US utilities added 94 billion cubic feet (bcf) of gas into storage during the week ended Oct. 8. That compares with an increase of 50 bcf in the same week last year and a five-year (2016-2020) average increase of 79 bcf.
If correct, last week’s injection would boost stockpiles to 3.382 trillion cubic feet (tcf), which would be 4.5% below the five-year average of 3.543 tcf for this time of year.
While utilities in Europe scramble to fill gas inventories before the winter heating season and governments around the world seek ways to control soaring prices, the situation in the United States is much calmer. Even though US oil and gas prices are near multi-year highs and expected to rise this winter, there is a growing belief in the market that the United States will have more than enough fuel for the winter.
Analysts expect US gas inventories will top 3.5 tcf by the start of the winter heating season in November, which they said would be a comfortable level even though it falls short of the 3.7 tcf five-year average. In Europe, analysts say stockpiles are about 15% below normal for this time of year.
Front-month gas futures were up 17.7 cents, or 3.2%, to $5.767 per million British thermal units (mmBtu) at 8:07 a.m. EDT (1207 GMT), putting the contract on track for its highest close since Oct. 5.