NEW YORK: US natural gas futures edged up about 1% to a three-week high on Monday on a drop in output in recent weeks and forecasts for more demand this week than previously expected.
Gas futures for June delivery on the New York Mercantile Exchange rose 2.7 cents, or 0.7%, to $3.657 per million British thermal units, putting the contract on track for its highest close since April 9 for a second day in a row.
Looking forward, the premium of futures for July over June rose to a record 33 cents per mmBtu.
Even though gas futures jumped about 24% last week, speculators cut their net long futures and options positions on the New York Mercantile and Intercontinental exchanges for an eighth week in a row to the lowest since January, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.
Analysts said mild weather expected to last through late-May should keep heating and cooling demand low, allowing utilities to continue injecting more gas into storage than normal for this time of year.
Gas stockpiles were around 1% above the five-year normal.
Gas stockpiles had been below normal from mid-January through late April after utilities pulled a monthly record 1.013 billion cubic feet of gas from storage in January to keep homes and businesses warm during extreme cold weather this winter.
Some analysts said mild weather and record output this spring could allow energy firms to add record amounts of gas into storage in May. The current all-time monthly injection high of 494 bcf was set in May 2015.
Financial firm LSEG said average gas output in the Lower 48 US states fell to 103.7 billion cubic feet per day so far in May, down from a monthly record of 105.8 bcfd in April.
Since gas output hit a daily record high of 17.4 bcfd on April 18, production was on track to drop by around 3.9 bcfd to a preliminary 10-week low of 103.5 bcfd on Monday.
That, however, was a smaller daily decline than LSEG forecast on Friday. Analysts have noted that preliminary data is often revised later in the day.
Meteorologists projected temperatures in the Lower 48 states would remain mostly warmer than normal through May 20.
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