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U.S. natgas futures fall over 2% on less cold weather forecasts


U.S. natural gas futures on Friday dropped over 2% on forecasts for less cold weather later in December than previously expected.In addition, traders noted prices fell because the market expects inventories to return to a surplus over the five-year average over the next week or two as rising production enables utilities to leave more gas in storage, wiping away lingering concerns of potential supply shortages this winter.

Front-month gas futures for January delivery on the New York Mercantile Exchange were down 5.6 cents, or 2.4%, to $2.272 per million British thermal units at 8:20 a.m. EST (1320 GMT). That is less than five cents over its close on Dec. 9, which was its lowest settle since Oct. 11.

For the week, the front-month was on track to fall over 2% after gaining over 2% last week.

Meteorologists projected the weather in the U.S. Lower 48 states will turn from warmer than normal now to colder from Dec. 17-22, near normal from Dec. 23-26 and colder again on Dec. 27-28. Next week’s cold snap, however, is two days shorter than meteorologists projected on Thursday.

With cooler weather coming, Refinitiv predicted demand in the Lower 48 states, including exports, would rise from an average of 118.0 bcfd this week to 127.4 bcfd during the week of Dec. 15 and 127.6 bcfd during the week of Dec. 22.

The forecasts for this week and next are close to Refinitiv’s projections on Thursday. But traders said prices were falling because the market was expecting colder weather and more heating demand during the week of Dec. 22.

Gas flows to liquefied natural gas (LNG) export plants rose to 8.17 bcfd on Thursday from 7.85 bcfd on Wednesday, according to Refinitiv data. That compared with an average of 7.62 bcfd last week and an all-time high of 8.24 bcfd on Dec. 8 with the ramp-up of new liquefaction trains at Freeport LNG’s plant in Texas and Cameron LNG’s plant in Louisiana.

Separately, traders said Kinder Morgan Inc’s Elba Island LNG export plant in Georgia could send out its first cargo this week.

Pipeline flows to Mexico, meanwhile, eased to 5.7 bcfd on Thursday from 5.8 bcfd on Wednesday, according to Refinitiv data. That compares with an average of 5.3 bcfd last week and an all-time daily high of 6.2 bcfd on Sept. 18.

Gas production in the Lower 48 states rose 94.7 bcfd on Thursday from a five-week low of 94.3 bcfd on Wednesday, according to data provider Refinitiv. That compared with an average of 95.4 bcfd last week and a record high of 96.3 bcfd on Nov. 30.

Analysts said utilities likely pulled 89 billion cubic feet (bcf) of gas from storage during the week ended Dec. 13. That compares with a withdrawal of 132 bcf during the same week last year and a five-year (2014-18) average decline of 112 bcf.

If correct, the decrease for the week ended Dec. 13 would cut stockpiles to 3.429 trillion cubic feet (tcf), turning the amount of gas in storage from a deficit during the week ended Dec. 6 to a surplus of 0.3% over the five-year average of 3.420 tcf for this time of year.



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