U.S. natural gas futures rose for a third day in a row on Tuesday on a confirmation of forecasts for cooler weather and higher heating demand next week, as reported by Reuters.
Traders noted that increase came despite lower liquefied natural gas (LNG) exports and higher gas production.
Front-month gas futures for May delivery on the New York Mercantile Exchange rose 8.5 cents, or 4.9%, to $1.816 per million British thermal units at 8:17 a.m. EDT (1217 GMT). That puts the front-month up about 17% over the past three days and on track to settle at its highest in three weeks.
Just last week, however, the contract fell to its lowest since August 1995. Even before the coronavirus started to cut global economic growth and energy demand, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more fuel in storage, making shortages and price spikes unlikely.
Gas futures, however, are trading much higher for the balance of 2020 and calendar 2021 on expectations demand will jump in coming months as the economy snaps back after governments loosen travel and work restrictions once the spread of coronavirus slows. Calendar 2021 has traded at a premium over 2022 for 19 days and over 2025 for 9 days.
With cooler weather coming, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, will rise from an average of 93.3 billion cubic feet per day (bcfd) this week to 99.8 bcfd next week. That compares with Refinitiv’s forecasts on Monday of 94.0 bcfd this week and 100.3 bcfd next week.
The amount of gas flowing to U.S. LNG export plants, meanwhile, slipped to a near three-week low of 7.8 bcfd on Monday from 8.2 bcfd on Sunday, according to Refinitiv. That compares with an average of 8.9 bcfd last week due to reductions at Cheniere Energy Inc’s Sabine Pass in Louisiana and Corpus Christi in Texas, and an all-time daily high of 9.5 bcfd on Jan. 31.
Gas production edged up to 93.2 bcfd on Monday from 93.1 bcfd on Sunday, according to Refinitiv. That compares with an average of 93.1 bcfd last week and an all-time daily high of 96.5 bcfd on Nov. 30.
Analysts said utilities likely injected 10 billion cubic feet (bcf) of gas into storage during the week ended April 3. That compares with an increase of 25 bcf during the same week last year and a five-year (2015-19) average build of 6 bcf for the period.
If correct, the increase for the week ended April 3 would bring stockpiles to 1.996 trillion cubic feet (tcf), 17.4% above the five-year average of 1.700 tcf for this time of year.
Reporting by Scott DiSavino; Editing by Bernadette Baum
