US natural gas futures rise

US natural gas futures rose on Monday from a five-week low last week on forecasts for more heating demand through the middle of December than previously predicted. Front-month gas futures for January delivery on the New York Mercantile Exchange were up 5.8 cents, or 2.5%, to $2.339 per million British thermal units at 8:52 a.m. EST (1352 GMT). On Friday, the contract settled at its lowest since Oct. 22.

Despite Monday's front-month gain, the spread between several contracts used to bet on winter weather hit the lowest in years for this season as record production and adequate storage cause the market to give up on worries about any shortfall in supplies. But for next winter, spreads rose to their highest in years as traders start to focus on next year.

The premium of January futures over February briefly fell to its lowest since January 2018, while the premium of March over April fell to a record low several times last week. Looking to next winter, however, the premium of November over October rose to its highest since April 2011.

With a seasonal cooling of the weather, data provider Refinitiv projected average gas demand in the US Lower 48 states, including exports, would rise to 120.3 billion cubic feet per day (bcfd) next week from 116.3 bcfd this week.

That compares with Refinitiv's estimates on Friday of 114.8 bcfd for next week and 114.4 bcfd for this week. Gas flows to liquefied natural gas (LNG) export plants rose to 7.5 bcfd on Sunday from 7.4 bcfd on Saturday, according to Refinitiv data. That compares with an average of 7.3 bcfd last week and an all-time daily high of 7.9 bcfd on November 28.

Pipeline flows to Mexico, meanwhile, slipped to 5.0 bcfd on Sunday from 5.4 bcfd on Saturday, according to Refinitiv data. That compares with an average of 5.4 bcfd last week and an all-time daily high of 6.2 bcfd on September 18. Analysts said utilities likely pulled just 29 billion cubic feet (bcf) of gas from storage during the week ended Nov. 29. That compares with a withdrawal of 62 bcf during the same week last year and a five-year (2014-18) average decline of 41 bcf for the period. If correct, the decrease would cut stockpiles to 3.581 trillion cubic feet (tcf), 0.5% below the five-year average of 3.600 tcf for this time of year.