U.S. natural gas futures edged up about 0.2% on Monday, on hopes that winter might reappear, ending the downward spiral in prices despite forecasts for lower demand and rising output.
Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) rose 0.3 cents, or about 0.1%, to settle at $2.082 per million British thermal units (mmBtu). On Thursday, the contract settled at its lowest since April 13, 2023.
“There are some weather models that are talking about another potential polar vortex somewhere around Valentine’s day, and that’s giving the market a little bit of life,” said Phil Flynn, an analyst at Price Futures Group.
“So even though we’ve seen some extremely above normal temperatures, the return of winter is stopping the free fall on prices.”
Meteorologists projected temperatures in the Lower 48 states would remain warmer than normal through at least Feb. 15 before turning near normal on Feb. 16-17. Colder temperatures should boost heating demand in mid-February. For now, meteorologists expect the weather to remain warmer than normal.
LSEG estimated 358 heating degree days (HDDs) over the next two weeks, up from 333 HDDs estimated on Friday. The normal for this time of year is 408 HDDs.
Financial company LSEG said gas output in the U.S. Lower 48 states rose to an average of 105.4 billion cubic feet per day (bcfd) so far in February from 102.0 bcfd in January. That was still below the monthly record high of 106.3 bcfd in December.
LSEG forecast U.S. gas demand in the Lower 48, including exports, would fall from 122.5 bcfd this week to 122.4 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Friday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 13.7 bcfd so far in February, down from 13.9 in January. That was still below the monthly record high of 14.7 bcfd in December.
Analysts said U.S. LNG feedgas would likely not revisit record levels until Freeport LNG export plant in Texas returns to full power, which is expected to occur in mid- to late-February.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $9 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia.
(Reporting by Brijesh Patel and Rahul Paswan in Bengaluru; Editing by Kirsten Donovan and David Gregorio)