U.S. natural gas futures climbed more than 3% on Friday and were on track for a monthly gain, driven by forecasts for colder weather that should boost heating demand and force utilities to start pulling more gas from storage.
Front-month gas futures for January delivery on the New York Mercantile Exchange were up 10.8 cents, or 3.4%, to $3.31 per million British thermal units (mmBtu) at 9:18 a.m. EST (1419 GMT). The contract has gained about 22% so far this month.
“Natural gas is snapping back as cold weathers, unlike we have seen in recent years is making a comeback. We are seeing it impact gas prices not only here in the U.S. but in Europe as their supplies are dwindling at the fastest rate in years raising renewed concerns of energy shortages if their winter stays cold,” said Phil Flynn, an analyst at Price Futures Group.
LSEG estimated 402 heating degree days (HDDs) over the next two weeks, higher than the 382 forecast on Thursday.
The U.S. Energy Information Administration (EIA) on Thursday showed utilities pulled an expected 2 billion cubic feet (bcf) of gas from storage last week.
Meteorologists projected that weather in the Lower 48 will turn from mostly colder than normal now through Dec. 3 to mostly near-normal from Dec. 4-12.
With seasonally colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would jump from 131.3 bcfd this week to 133.1 bcfd next week.
LSEG said average gas output in the Lower 48 U.S. states rose to 101.5 billion cubic feet per day (bcfd) so far in November, from 101.1 bcfd in October. That compares with a record 105.3 bcfd in December 2023.
Analysts expect producers to boost gas output in 2025 as rising demand from liquefied natural gas (LNG) export plants increases prices after drillers reduced production in 2024 for the first time since the COVID-19 pandemic.
“While natural gas production in the U.S. may edge up, many producers are going to try to stay disciplined. In past years when they raised production in response to the first cold front they were left holding the gas,” Flynn added.
Elsewhere, Dutch and British wholesale gas prices were largely steady on Friday morning amid muted market activity and some profit-taking, with supply and weather forecasts little changed.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Alexander Smith)