US natural gas futures on Wednesday eased on forecasts for warmer weather for the next two weeks, despite a major winter storm expected to hit the Northeast over the next couple of days. Front-month gas futures eased 0.4 cents, or 0.1 percent, to settle at $3.126 per million British thermal units. That left the contract down about 11 percent from a January 26 high due to the forecasts for warmer weather.
Next-day gas prices in New York and New England, meanwhile, both surged to their highest since early January on forecasts for temperatures there to plunge and a storm expected to drop up to 12 inches of snow from New York to Boston on Thursday.
For the nation as a whole, the November-through-March period so far is on track to be slightly colder than last year's record-warm winter but warmer than the 10- and 30-year averages.
Heating degree days have totaled 2,137 so far this season, versus 2,074 during the same period last winter, a 30-year average of 2,406 and a 10-year average of 2,344, according to Thomson Reuters data.
US gas demand will slide to 96.1 billion cubic feet per day this week and 91.1 bcfd next week from 100.7 bcfd last week as temperatures moderate, Thomson Reuters projected.
Analysts said utilities likely pulled 155 billion cubic feet of gas from storage during the cold week ended February 3, the most since 2015.
That compares with declines of 93 bcf a year earlier and the five-year average of 138 bcf for that week.
Even though storage levels are currently about 2 percent over the five-year average, analysts have projected inventories will decline faster than usual this year despite weaker power demand, in part because exports are higher and production is lower.
After the power sector used a record amount of gas to generate electricity last year, analysts projected it would burn less in 2017 because prices of the fuel are expected to be about 25 percent higher, making coal a cheaper alternative for many generators.
US production averaged 70.2 bcfd over the past 30 days, compared with 73.5 bcfd a year earlier and 72.8 bcfd for the same period in 2015, according to Reuters data.
US exports were up to 8.1 bcfd this week from 5.1 bcfd a year earlier, while imports were down to 8.4 bcfd this week from 9.8 bcfd a year ago. Analysts expect the United States to become a net exporter of gas on an annual basis this year or in 2018 for the first time since 1957.