US natural gas futures on Friday fell over 2 percent on forecasts for weaker power demand over the next two weeks. Front-month gas futures on the New York Mercantile Exchange closed down 6.4 cents at $2.642 per million British thermal units. With the decline, the front-month fell into oversold territory for the first time since January and ended down for a fifth day in a row, its longest losing streak since December. The most active options Friday were the $1.50 October and $2 August 2015 puts.
Thomson Reuters Analytics said the Global Forecast System weather model for the lower 48 US states called for cooler but still above-normal temperatures over the next two weeks, with 128 population-weighted cooling degree days. That compared with Thursday's forecast of 134 CDDs and a 30-year norm of 113 CDDs for this time of year.
With the weather less warm, consumption in the lower 48 was expected to average 54.6 billion cubic feet per day over the next two weeks. That compared with Thursday's forecast of 55.1 bcfd and a 30-year norm of 51.3 bcfd for this time of year. While residential, commercial and industrial customers were using less gas than usual, power generators were burning more of it instead of coal due to low gas prices.
Thomson Reuters Analytics forecast power generators would use an average 26.6 bcfd over the next two weeks compared with 24.0 bcfd a year earlier and a 30-year norm of 22.8 bcfd. Drillers were expected to produce 72.3 bcfd of gas in the lower 48 states on Friday, up from 72.1 bcfd on Thursday. That compared with 69.4 bcfd a year ago and a record high of 74.5 bcfd in December.
Net imports from Canada were expected to fall to 5.8 bcfd from 6.3 bcfd on Thursday, while exports to Mexico were expected to hold at 2.7 bcfd, the same as Thursday, according to Thomson Reuters Analytics. In early estimates, analysts forecast utilities added 108 billion cubic feet of gas into storage during the week ended May 29.
That compared with builds of 112 bcf in the prior week, 118 bcf a year earlier and a five-year average increase of 92 bcf. In liquefied natural gas news, two tankers were moving west across the Atlantic toward North America - the Norgas Conception was heading toward Louisiana, while the British Innovator was heading toward the US East Coast or the Canadian Maritimes.