US natural gas futures climbed about two percent amid December options expiry on Friday to touch a near four-week high, following through from their gains on Wednesday despite forecasts for above-normal temperatures the next couple of weeks. Front-month gas futures for December delivery on the New York Mercantile Exchange rose for the fifth straight session, gaining 5.9 cents or 1.9 percent to settle at $3.085 per million British thermal units.
The contract touched a session peak of $3.121, the highest since October 31, and rose 8 percent for the week, marking the second consecutive week of gains. "The natural gas market is heading higher in anticipation of colder seasonal temperatures, even though today's temperature outlook for the next two weeks is more moderate than it appeared on Wednesday," Citi Futures energy futures specialist Tim Evans said in a research note. "While we still see enough cold to translate into some above average storage withdrawals, the price strength makes the rally look more like a generic seasonal rally than a reaction to a specific weather forecast. Options on December natural gas expire today, possibly contributing to price volatility."
US natural gas futures had touched their highest level in November on Wednesday after the US Energy Information Administration (EIA) said utilities withdrew 2 billion cubic feet (bcf) of gas from storage in the week ended November 18, versus an expected build of 5 bcf in a Reuters poll.
With the December contract in its last week as the front-month during the holiday-shortened week, the market has shifted its focus to futures for the rest of the winter. NYMEX futures with the most open interest were January at about 298,300 contracts, March at 182,800, April at 103,300 and February at 81,600. There were just 16,700 December contracts open. Thomson Reuters projected US gas usage at an average 86.3 bcf per day for the current storage week, rising to 96.8 bcfd next week, from 87.5 bcfd last week. Gas supplies, meanwhile, were expected to remain relatively unchanged at about 78.4 bcfd this week and 78.6 bcfd for next week, compared with 78.5 bcfd last week.