US natural gas futures edged lower as forecasts for warmer weather for much of the rest of the winter offset expectations for colder temperatures at the end of January.
Meteorologists forecast the weather would remain mostly warmer than normal over the next 10 days or so before turning colder than usual at the end of the month. They said February and March would be mostly warmer than normal, however.
After the Martin Luther King Jr. holiday weekend in the United States, front-month gas futures fell 0.7 cents, or 0.2 percent, to settle at $3.412 per million British thermal units.
November through March is on track to be colder than last year's record-warm winter but with higher temperatures than the 10- and 30-year averages. Heating degree days have averaged 21.4 so far this season, versus 19.5 HDDs during the same period last winter, a 30-year average of 23.3 HDDs and a 10-year average of 22.6 HDDs, according to Thomson Reuters data.
The warmer forecasts helped push the March-April 2017 spread into contango, with April now the premium future for the first time since the contracts started trading in 2008. Traders use March as a proxy for the winter weather. A warmer winter lowers March futures.
Thomson Reuters projected US gas demand would fall from an average of 112.0 billion cubic feet per day last week to 95.7 bcfd this week and 87.6 bcfd next week as the weather moderates and the power sector uses less of the fuel.
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