U.S. natural gas futures climbed about 4% to a one-week high on Monday on rising flows to liquefied natural gas (LNG) export plants and forecasts for colder weather and higher heating demand next week than previously expected.
Front-month gas futures for March delivery on the New York Mercantile Exchange rose 12.1 cents, or 3.7%, to $3.430 per million British thermal units (mmBtu) at 8:06 a.m. EST (1306 GMT), putting the contract on track for its highest close since January 29.
Speculators last week cut their net long futures and options positions on the New York Mercantile and Intercontinental Exchange for the first time in nine weeks, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.2 billion cubic feet per day (bcfd) so far in February, up from 102.7 bcfd in January when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.
On a daily basis, however, output was on track to slide by 1.2 bcfd over the past four days to a preliminary one-week low of 105.5 bcfd on Monday. That compares with a daily record high of 106.7 bcfd on February 6. Analysts noted preliminary data is often revised later in the day.
After extreme cold last month boosted heating demand to an all-time high, analysts said energy firms may have pulled a record amount of gas out of storage in January. The current record monthly storage withdrawal is 994 bcf in January 2022, according to federal energy data.
Meteorologists projected weather in the Lower 48 states would remain mostly colder than normal through February 25.
With colder weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, will rise from 132.9 bcfd this week to 138.9 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Friday, while its forecast for next week was higher.
The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.2 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading at a two-year high of around $18 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and an eight-week high of around $15 at the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters