US natgas near three-week high on colder weather forecasts

NEW YORK: US natural gas futures rose more than 2% to a near three-week high on Wednesday, helped by forecasts for colder weather over the next two weeks than previously expected and hopes that soaring prices in Europe will keep demand for US liquefied natural gas (LNG) exports strong.

Front-month gas futures rose 10.7 cents, or 2.8%, to settle at $3.976 per million British thermal units (mmBtu), their highest close since Dec. 3.

“Some cold and more seasonal weather on the horizon, and record LNG export pulling gas away from domestic consumption are contributing to the upside,” said Zhen? Zhu, managing consultant at CH Guernsey and Company in Oklahoma City.

“Given these market fundamentals, expect prices will remain at the current levels or go higher before heading south when the winter is over and higher production news hitting the market.

Data provider Refinitiv estimated 409 heating degree days (HDDs) over the next two weeks in the lower 48 US states, up from the 405 HDDs estimated on Tuesday. The normal is 429 HDDs for this time of year.

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

Refinitiv projected average US gas demand, including exports, would rise from 109.7 billion cubic feet per day last week to 125.1 bcfd this week before easing to 116.8 bcfd next week.

Gas prices in Europe jumped to a record high on Tuesday after Russian gas shipments to Germany through a major transit pipeline reversed direction and colder weather increased demand.

Global gas prices have repeatedly touched all-time highs over the last few months as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls caused power blackouts in China.

The amount of gas flowing to US LNG export plants has averaged 11.9 bcfd so far in December, now that the sixth train at Cheniere Energy Inc’s Sabine Pass plant in Louisiana is producing LNG. That compares to 11.4 bcfd in November and a monthly record of 11.5 bcfd in April.

Output in the US Lower 48 states has averaged 96.7 billion cubic feet per day (bcfd) so far in December, which would top the monthly record of 96.5 bcfd in November.