NEW YORK: US natural gas futures edged up about 1% on Friday on forecasts for the return of seasonally colder weather and higher heating demand later this month, a day after prices closed at a nine-month low.
That put the front-month down about 23% for the week after it gained about 8% last week and dropped about 24% two weeks ago.
Traders noted prices gained on Friday even though the weather is expected to remain warmer than normal through mid-February, gas output was rising as more wells return to service after a mid-January freeze, and the amount of gas flowing to the nation’s liquefied natural gas (LNG) export plants remained low due to a unit outage at Freeport LNG’s export plant in Texas.
Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) rose 2.9 cents, or 1.4%, to settle at $2.079 per million British thermal units (mmBtu). On Thursday, the contract settled at its lowest since April 13, 2023.
That kept the front-month in technically oversold territory for a fourth day in a row.
Rising price volatility has increased interest in gas trading in recent weeks, boosting open interest in NYMEX futures to 1.48 million contracts on Jan. 31, the most since February 2020 for a second day in a row.
In other news, a top US Energy Department official will testify at the Feb. 8 Senate Energy Committee hearing looking into President Joe Biden’s pause on new approvals for LNG exports.
Financial company LSEG said gas output in the US Lower 48 states rose to an average of 104.7 billion cubic feet per day (bcfd) so far in February from 102.0 bcfd in January. That was still below the monthly record high of 106.3 bcfd in December.
Meteorologists projected temperatures in the Lower 48 states would remain warmer than normal through at least Feb. 15 before turning near normal on Feb. 16-17.
LSEG forecast US gas demand in the Lower 48, including exports, would slide from 126.6 bcfd this week to 125.1 bcfd next week and 124.5 bcfd in two weeks. The forecast for next week was lower than LSEG’s outlook on Thursday.
Gas flows to the seven big US LNG export plants rose to an average of 14.0 bcfd so far in February, up from 13.9 in January. That was still below the monthly record high of 14.7 bcfd in December.
Analysts said US LNG feedgas would likely not revisit record levels until Freeport LNG returns to full power, which is expected to occur in mid- to late-February.
The US became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $9 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia.