US natural gas futures fall on weather forecasts

US natural gas futures eased on Thursday on weather forecasts calling for less heating demand over the next two weeks than previously expected. That decline came despite what some analysts called a supportive storage report. Stocks last week fell for the first time this heating season due to colder than normal weather and rising exports. That decline was a week earlier than usual for this time of year.
"The market's lack of bullish response to what appeared to be a very supportive weekly storage draw strongly suggests that current supply-side news is being pushed to the sidelines in deference to daily updates to the short-term temperature outlooks," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a report, noting he did not expect Friday's oil rig count to exert much price impact. The US Energy Information Administration (EIA) said utilities pulled 18 billion cubic feet (bcf) of gas out of storage during the week ended on November 10. That was the first drop for that week since 2012.
The withdrawal topped the 14 bcf decrease that analysts forecast in a Reuters poll and compared with a year-earlier build of 34 bcf and a five-year average increase of 12 bcf for that period. The projected weekly decrease left stocks at 3.772 trillion cubic feet, or about 2.6 percent below the five-year average of 3.873 tcf for this time of year. Front-month gas futures fell 2.7 cents, or 0.9 percent, to settle at $3.053 per million British thermal units, the lowest close since November 3.
Thomson Reuters lowered its forecast for US gas consumption to an average of 93.7 billion cubic feet per day from 95.4 bcfd for next week. That is still up from an estimate for this week that was trimmed to 91.8 bcfd from 92.0 bcfd. Production in the lower 48 US states averaged an all-time high of 75.4 bcfd over the past 30 days, according to Reuters data. Output peaked last week at a daily high of 76.4 bcfd and has since remained near that level.
Even though the amount of gas in storage is less than usual for this time of year, some traders said it would be more than enough fuel to meet demand this winter, especially if production remains near record highs and the latest weather forecasts for the season are correct. The National Weather Service expects temperatures in December, January and February to be warmer than normal across much of the country again this year. The previous two winters were among the warmest on record.
US gas exports are expected to average 9.5 bcfd this week, up 27 percent from a year earlier, primarily because of much higher shipments of liquefied natural gas, according to Reuters data.