US Natgas Prices Jump 7% to 1-Year High on Surprise Storage Draw, Colder Forecasts

The U.S. Energy Information Administration said utilities pulled 3 billion cubic feet (bcf) of gas from storage during the week ended Nov. 15.

That compares with the 6 bcf build analysts forecast in a Reuters poll, the 12 bcf increase seen during the same week last year and a five-year average draw of 16 bcf for this time of year.

Front-month gas futures for December delivery on the New York Mercantile Exchange rose 23.5 cents, or 7.4%, to $3.428 per million British thermal units (mmBtu) at 10:42 a.m. EST (1542 GMT), putting the contract on track for its highest close since November 2023.

That kept the front-month in technically overbought territory for a second day in a row and put it on track to rise for a fifth straight day. During those five days, the contract has gained about 23%.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states eased to 100.8 billion cubic feet per day (bcfd) so far in November, down from 101.3 bcfd in October. That compares with a record 105.3 bcfd in December 2023.

That kept output on track to decline in 2024 for the first time since the COVID-19 pandemic cut demand in 2020.

Many producers reduced drilling activities this year after average spot monthly prices at the U.S. Henry Hub benchmark in Louisiana fell to a 32-year low for the month of March, and have remained soft since then.

Meteorologists projected weather in the Lower 48 states will remain mostly near normal through Nov. 27 before turning colder than normal from Nov. 28-Dec. 6.

With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 107.8 bcfd this week to 115.7 bcfd next week. Those forecasts were lower than LSEG’s outlook on Wednesday.

The amount of gas flowing to the seven big operating U.S. LNG export plants rose to an average of 13.5 bcfd so far in November, up from 13.1 bcfd in October. That compares with a monthly record high of 14.7 bcfd in December 2023.

On a daily basis, LSEG said feedgas was on track to jump to an 11-month high of 14.5 bcfd on Thursday, up from 14.1 bcfd on Wednesday, as flows to a couple of plants rose to record highs.

Cameron LNG’s 2.0-bcfd plant in Louisiana was on track to pull in a record 2.4 bcfd on Thursday, while flows to the first 1.8-bcfd phase of Venture Global’s Plaquemines facility, which is under construction in Louisiana, was on track to rise to a record 60 million cubic feet per day on Thursday.

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 invasion of Ukraine in February 2022.

Gas prices rose to 11-month highs of around $15 per mmBtu at both the Dutch Title Transfer Facility benchmark in Europe and the Japan-Korea Marker benchmark in Asia on worries about Russian supplies and the coming of colder winter weather.

(Reporting by Scott DiSavino; Editing by Paul Simao and Bill Berkrot)