NEW YORK: US natural gas futures rose about two percent to a two-month high on Thursday as wildfires kept gas exports from Canada near a 25-month low.
That price increase came ahead of a federal report expected to show a bigger-than-usual US storage build last week when mild weather kept demand for the fuel low for both heating and cooling.
Analysts forecast US utilities added 108 billion cubic feet (bcf) of gas into storage during the week ended May 12. That compared with an increase of 87 bcf in the same week last year and a five-year (2018-2022) average increase of 91 bcf.
If correct, last week’s increase would boost stockpiles to 2.249 trillion cubic feet (tcf), or 18.4% above the five-year average of 1.900 tcf for the time of year.
Front-month gas futures for June delivery on the New York Mercantile Exchange rose 4.9 cents, or 2.1%, to $2.414 per million British thermal units (mmBtu) at 9:16 a.m. EDT (1316 GMT), putting the contract on track for its highest close since March 16.
Data provider Refinitiv said average gas output in the US Lower 48 states held at 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record high in April. The amount of gas flowing from Canada to the US dropped to a fresh 25-month low of 6.4 bcfd on Wednesday as wildfires in Alberta caused some producers to shut oil and gas output and pipeline flows over the past couple of weeks.
During those two weeks, US gas futures gained about 13% as Canada exported an average of just 7.1 bcfd of gas to the US That is down from an average of 8.4 bcfd since the start of the year and 9.0 bcfd in 2022.
About 8% of the gas consumed in the US or exported as liquefied natural gas (LNG) or via pipelines comes from Canada.
Meteorologists projected the weather in the US Lower 48 states would switch from near-normal levels from May 18-27 to warmer than normal from May 28-June 2.
Refinitiv forecast US gas demand, including exports, would slide from 93.0 bcfd this week to 89.6 bcfd next week.
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