US natural gas futures on Monday ended a week of declines to edge higher on forecasts for less mild weather and rising heating demand over the next two weeks. After falling 11 percent last week in its biggest weekly loss since January, front-month gas futures rose 4.9 cents, or 1.8 percent, to settle at $2.816 per million British thermal units.
Even though the latest forecast was for cooler weather and higher heating demand, temperatures were expected to remain at above-normal levels through late November, allowing utilities to keep pumping gas into stockpiles that were already at record-high levels.
Analysts projected inventory levels would approach 4.1 trillion cubic feet later this month, topping the all-time high of 4.009 tcf set in November 2015. Those stockpiles could remain near record levels for a while, some analysts said, noting a few of the latest forecasts call for the weather to remain at near-normal levels in December and warmer-than-normal in January-March. US gas usage was expected to rise from an average of 69.6 billion cubic feet per day last week to 73.2 bcfd this week and 78.2 bcfd next week due to an increase in heating demand as the weather cools, Reuters data showed.
Power demand for gas averaged 23.0 bcfd so far in November, down from 25.3 bcfd during the same period last year as higher gas prices this year made coal the cheaper fuel for many generators. Gas futures were 23 percent higher so far this month compared with 2015.
But, power usage was still higher than both the 10- and 30-year averages of around 18.2 bcfd over the same period after the retirement of so many coal plants over the past several years has left gas as the only option in several regions.
Gas supplies, meanwhile, were expected to edge up from an average of 77.7 bcfd this week to 77.9 bcfd next week on higher US production before slipping to 77.7 bcfd in two weeks as imports from Canada ease, Reuters data showed. US production averaged 69.9 bcfd over the past 30 days, its lowest since 2013. But over the past week it has averaged 70.4 bcfd as drillers slowly increase output in the Marcellus and Utica shale basins now that prices there have increased.
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