NEW YORK: US natural gas futures rose 5 percent on Monday as forecasts for colder weather and lower production boosted expectations for stronger heating demand, lifting prices to their highest level in three weeks.
Front-month gas futures for December delivery on the New York Mercantile Exchange traded 16.2 cents higher, or 5.4 percent, to USD3.16 per million British thermal units, after touching their highest level since October 19 earlier in the session.
“The winter season is like the Super Bowl for the natural gas industry … we haven’t seen much in the way of below-normal temperatures … we’re in November. And so no surprise that some cold weather is showing up and the prices are rallying,” said Thomas Saal, senior vice president at StoneX.
Traders have been weighing the possibility of colder temperatures later this month, which could boost heating demand and support natural gas prices.
“Last week’s slippage in production appears to be encouraging some buying interest that could help to sustain last week’s show of support,” Ritterbusch and Associates said in a note.
Financial firm LSEG said average gas output in the US Lower 48 states has fallen to 112.1 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October and a monthly record high of 115.0 bcfd in August.
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 this week’s federal inventory report.
Still, with seasonally colder weather coming, LSEG said average gas demand in the Lower 48 states, including exports, would rise from 114.7 bcfd this week to 120.0 bcfd next week.
Average gas flows to the nine major US LNG export plants have risen to a record 19.3 bcfd so far in November, above the previous monthly record average of 18.4 bcfd in October.
Benchmark Dutch and British wholesale gas prices rose on Monday amid forecasts for colder weather, which is expected to increase demand for heating.