NEW YORK: US natural gas futures gained more than 7% on Wednesday, rebounding from a four-year low hit in the previous session, helped by forecasts for slightly cooler weather leading to increased demand for gas for heating.
Front-month gas futures for April delivery rose 7.7 cents, or 7.7%, to settle at $1.885 per million British thermal units (mmBtu). Prices dropped to as low as $1.51 in the previous session, its weakest level since June 2020, hurt by surplus supplies.
“Today prices are all about weather’s starting to get a little bit colder and production tallying off a bit,” said Phil Flynn, an analyst at Price Futures Group.
“But, unless forecasts project it to be cold through March, it is not going to be enough to offset all the heating degree days that we missed.”
LSEG estimated 260 heating degree days (HDDs) for the year as of Wednesday, compared with 259 HDDs on Tuesday. LSEG said gas output in the US Lower 48 states rose to an average of 105 billion cubic feet per day (bcfd) so far in February, up from 102.1 bcfd in January, but still short of the monthly record high of 106.3 bcfd in December.
On a daily basis, however, output so far this week was at 102.4 bcf compared to 104.3 bcf last week.
Last week, prices soared about 13% after Chesapeake Energy, soon to be the biggest US gas producer after its merger with Southwestern Energy, cut planned production for 2024 by roughly 30% after a recent plunge in prices.
Natural gas prices have plunged around 26% so far this year, hurt by a mild winter that has left stockpiles well above normal, while output remained near record levels despite an Arctic freeze in January that briefly cut output and sent gas demand to a record high.
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