U.S. natural gas futures climbed to their highest in nearly two years on Monday on forecasts for higher heating demand and concerns that Tropical Storm Zeta aiming at the U.S. Gulf Coast could disrupt production.
Front-month gas futures rose 5.3 cents, or 1.8%, to settle at $3.024 per million British thermal units (mmBtu). Prices earlier rose to their highest since Jan. 25, 2019 at $3.080 per mmBtu.
“We are seeing some cold weather temperatures that will be coming across in the next week, so we are going to see some very strong demand,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago.
Data provider Refinitiv predicted 212 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states, higher than the 30-year normal of 204 HDDs.
HDDs measure the number of degrees a day’s average temperature is below 65 Fahrenheit (18 Celsius) and are used to estimate demand to heat homes and businesses.
Refinitiv projected average demand would jump from 97 bcfd this week to 97.4 bcfd next week.
Concerns that Tropical Storm Zeta, which was poised to turn into a hurricane as it approached the Gulf of Mexico, would disrupt oil and gas production, was also fuelling price gains, Flynn said.
Zeta has already forced the closure of 16% of crude oil and 6% of natural gas production, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) said.
Chevron Corp has evacuated staff from its U.S. Gulf of Mexico offshore facilities, while BP Plc and Equinor ASA withdrew workers and shut in offshore production ahead of the storm.
U.S. output in the Lower 48 U.S. states was at 87.6 billion cubic feet per day (bcfd) on Sunday, Refinitiv said. 29dk2902l