U.S. natural gas futures crept higher on Thursday, while the market focus shifted to the weekly storage report due later in the day
Analysts forecast U.S. utilities pulled 54 billion cubic feet (bcf) of gas out of storage during the week ended Dec. 8. This compares to 46 bcf during the same week a year ago and a five-year (2018-2022) average decrease of 81 bcf for this time of year. If correct, that would cut the stockpile to 3.665 trillion cubic feet (tcf), about 7.2% above the same week a year ago and 7.7% above the five-year average.
Front-month gas futures for January delivery on the New York Mercantile Exchange were up 2.3 cents, or 1.0%, to $2.36 per million British thermal units (mmBtu) at 9:31 a.m. EST (1431 GMT).
LSEG forecast U.S. gas demand in the Lower 48 states, including exports, at 125.2 bcfd this week and 125.4 bcfd next week, compared to last week’s 121.4 bcfd. Next week’s forecasts were higher than LSEG’s outlook on Wednesday.
“There is some seasonal demand as the weather is chilly and there is also some short covering,” said Thomas Saal, senior vice president for energy at StoneX Financial.
Despite the small price gain, with production at record levels, milder weather and ample amounts of gas in storage, the futures market has been sending bearish signals for weeks that futures prices for this winter (November-March) had likely already peaked in November. The contract was down more than 21% for November and hit a six-month low on Wednesday.
LSEG said average gas output in the Lower 48 U.S. states has risen to 108.4 bcfd so far in December from a record 108.3 bcfd in November.
Saal added that the “market will remain sluggish if weather remains above normal over most of the country. If forecasts change and it gets colder, then prices will firm and maybe back up to $3.”
Some analysts have reduced their U.S. demand forecasts after Exxon Mobil delayed the start of first LNG production at its 2.3-billion-cubic-feet-per-day (bcfd) Golden Pass export plant under construction in Texas to the first half of 2025 from the second half of 2024.
The U.S. is on track to become the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due in part to supply disruptions and sanctions linked to the war in Ukraine.
Gas was trading around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $15 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Anjana Anil and Ashitha Shivaprasad in Bengaluru; Editing by Paul Simao)