NEW YORK: US natural gas futures climbed about 2 percent to a nine-month high on Wednesday on forecasts for colder weather and more demand over the next two weeks than previously expected, near-record gas flows to liquefied natural gas export plants and a decline in output in recent weeks.
Front-month gas futures for December delivery on the New York Mercantile Exchange (NYMEX) rose 5.7 cents, or 2 percent, to USD3.353 per million British thermal units, putting the contract on track for its highest close since February 6.
That move also kept the front-month in technically overbought territory for a third day in a row for the first time since January.
In addition to higher demand and lower output, analysts noted that some of this week’s 12 percent gain was due to short-covering. Last week, speculators boosted their net short futures and options positions on the NYMEX and Intercontinental Exchange to the highest level since March 2020, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.
Financial firm LSEG said average gas output in the US Lower 48 states has fallen to 112.3 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October and a monthly record high of 115 bcfd in August.
Record output earlier in the year and mostly mild weather in the spring and autumn have allowed energy firms to keep the amount of gas in inventory above the five-year (2021-2025) average since March, with the level reaching a high of 7.7 percent above normal in April.
A hotter-than-normal summer, however, forced energy firms to pull more gas from storage than usual to fuel power plants needed to keep air conditioners working, cutting the inventory surplus to just 1 percent above normal in mid-October. About 40 percent of US power generation comes from gas-fired plants.
But the return of mild weather and lower-than-usual demand in recent weeks has left more gas available for energy firms to add more to storage.
The amount of gas in storage likely climbed to 2.1 percent above normal during the week ended November 6, up from 1.4 percent above normal in the previous week, according to analyst estimates ahead of Friday’s weekly federal inventory report. The inventory report was delayed a day for the US Veterans Day holiday on November 11.
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