NEW YORK: US natural gas futures climbed about 2% to a fresh 13-year high on Wednesday on a drop in daily output, a rise in daily feedgas to liquefied natural gas (LNG) export plants and forecasts for unusual cold in Alberta, Canada and unusual heat in the US Mid Atlantic region.
Spot gas prices in Alberta soared to their highest since March 2014 as homes and businesses cranked up their heaters to escape freezing weather this week. Next-day prices in Pennsylvania jumped to their highest since the February freeze in 2021 as some consumers dusted off their air conditioners for the first time this year to escape a brief hot spell.
Traders noted US futures rose even though the latest forecasts called for less cold and lower heating demand in the United States over the next two weeks than previously expected.
US front-month gas futures rose 14.7 cents, or 2.2%, to $6.827 per million British thermal units (mmBtu) at 9:02 a.m. EDT (1302 GMT), putting the contract on track for its highest close since November 2008 for a third day in a row.
US gas futures have already soared about 84% so far this year with much higher prices in Europe keeping demand for US LNG near record highs as several countries try to wean themselves off Russian gas after Russia invaded Ukraine on Feb. 24.
One of the more surprising observations about the recent US price run-up was that while US gas prices have soared about 48% over the past month, European gas, currently trading around $33 per mmBtu, fell about 7% because Russia keeps sending supplies via pipeline and LNG vessels keep delivering cargoes.
Analysts said that in addition to high global LNG demand, US prices were rising on domestic concerns including growing worries that cool weather in April could keep heating demand high enough to prevent utilities from injecting much gas into storage. US gas stockpiles were currently around 17% below the five-year (2017-2021) average for this time of year.
Data provider Refinitiv said average gas output in the US Lower 48 states rose to 94.6 billion cubic feet per day (bcfd) so far in April from 93.7 bcfd in March. That compares with a monthly record of 96.3 bcfd in December.
On a daily basis preliminary data showed US output was on track to drop 1.7 bcfd to 93.0 bcfd on Wednesday due mostly to declines in Appalachia. That would be the biggest daily decline since freezing weather shut wells in early February. Preliminary data is often revised. On Tuesday, the output decline was reduced from a preliminary 1.9 bcfd to just 0.7 bcfd later in the day.
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