U.S. natgas futures edge up from near 4-year low on cooler forecast

U.S. natural gas futures on Tuesday edged up from a near four-year low on forecasts for slightly cooler weather in mid-February than earlier expected.

Front-month gas futures for March delivery on the New York Mercantile Exchange rose 1.6 cents, or 0.9%, to $1.835 per million British thermal units (mmBtu) at 7:52 a.m. EST (1252 GMT). On Monday, the contract closed at its lowest since March 2016.

That keeps the front-month in technically oversold territory for 11 of the past 12 sessions, its longest stretch of market bearishness since July 2014 when the Relative Strength Index (RSI) remained below 30 for 16 days in a row.

Since hitting an eight-month high of $2.905 per mmBtu in early November, futures have collapsed 37%. Record production and mild weather have enabled utilities to leave more gas in storage, making shortages and winter price spikes unlikely.

Meteorologists projected the weather in the U.S. Lower 48 states will remain near-normal through Feb. 19. That is slightly cooler than Monday’s outlook for the week of Feb. 16.

Refinitiv, a data provider, projected average demand in the Lower 48 states, including exports, would rise from 116.0 billion cubic feet per day (bcfd) this week to 120.8 bcfd during the week of Feb. 9. That, however, is lower than Refinitiv’s estimates on Monday of 117.0 bcfd for this week and 122.3 bcfd for next week due to lower heating demand forecasts.

The amount of gas flowing to U.S. LNG export plants held at 9.3 bcfd for a third day in a row on Monday, according to Refinitiv. That compares with an average of 9.3 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.

Pipeline flows to Mexico, meanwhile, eased to 5.4 bcfd on Monday from 5.6 bcfd on Sunday, according to Refinitiv. That compares with an average of 6.0 bcfd last week and an all-time daily high of 6.2 bcfd on Jan. 28.

Gas output in the Lower 48 eased to 94.6 bcfd on Monday from 94.7 bcfd on Sunday, according to Refinitiv. That compares with an average of 94.1 bcfd last week and an all-time high of 96.8 bcfd on Nov. 30.

Analysts said utilities likely pulled 122 billion cubic feet (bcf) of gas from storage during the week ended Jan. 31. That compares with a decline of 228 bcf during the same week last year and a five-year (2015-19) average reduction of 143 bcf for the period.

If correct, the decrease for the week ended Jan. 31 would bring stockpiles to 2.624 trillion cubic feet (tcf), 8.9% above the five-year average of 2.410 tcf for this time of year.