NEW YORK: US natural gas futures edged up on Tuesday, as forecasts for a little colder weather than expected and higher heating demand over the next two weeks offset a slow increase in output following weeks of reductions due to freezing wells and pipes.
Prices had fallen for three days in record volatility.
Front-month gas futures for March delivery rose 1.6 cents, or 0.4%, to settle at $4.248 per million British thermal units (mmBtu). On Monday, the contract closed at its lowest since Jan. 25.
In the spot market, frigid weather and high heating demand in the US Northeast since the start of 2022 have kept next-day power and gas prices in New York and New England at or near their highest levels since January 2018. This prompted power generators there to burn lots of oil and liquefied natural gas (LNG).
Data provider Refinitiv said output in the US Lower 48 states fell from a record 97.3 billion cubic feet per day (bcfd) in December to 93.9 bcfd in January and 90.4 bcfd in February after wells in several regions froze, including the Permian in Texas and New Mexico, the Bakken in North Dakota and the Appalachia in Pennsylvania, West Virginia and Ohio. February’s average was higher than it was on Monday due to an expected output rise on Tuesday.
Even though forecasts were colder than expected, meteorologists still expect next week’s temperatures to be milder than this week.
Refinitiv projected average US gas demand, including exports, would drop from 130.6 bcfd this week to 122.3 bcfd next week. Those forecasts were higher than Refinitiv’s outlook on Monday. Traders said demand for US LNG would remain strong so long as global gas prices keep trading well above US futures as utilities around the world scramble for cargoes to meet surging demand in Asia and replenish low stockpiles in Europe - especially with the threat Russia could invade Ukraine and cut gas supplies to Europe.
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