U.S. natural gas futures climbed more than 6% on Friday to a near nine-month high, and were poised for a third straight monthly gain, driven by forecasts for colder weather and higher demand, while a bigger-than-expected storage withdrawal data this week provided support.
Contracts were higher as trading resumed after an outage at CME Group brought trading in currencies, commodities and equities futures to a standstill around the world.
Gas futures for January delivery on the New York Mercantile Exchange settled 6.4%, higher at $4.85 per million British thermal units (mmBtu). The contract was up nearly 6% this week.
“Natural gas prices were higher as this winter storm is going to be bearing down on a big part of the nation and obviously we’re seeing an increase in expectations of demand,” said Phil Flynn, senior analyst for Price Futures Group.
The U.S. Energy Information Administration said on Wednesday that energy firms pulled 11 billion cubic feet of gas out of storage during the week ended November 21. That was bigger than the 2-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of 2 bcf during the same week last year and an average decline of 25 bcf over the past five years (2020-2024).
Uncertainty surrounding the Russia–Ukraine peace talks is adding upward momentum, as expectations that sanctions on Russian natural gas exports may remain in place continue to support prices, added Flynn.
Russian President Vladimir Putin on Thursday called the Ukrainian leadership illegitimate and said it was senseless to sign any documents with them.
Natural gas prices rose for the third consecutive month. “We anticipate additional price strength due to the upcoming extreme cold and snowy conditions that will be sweeping across the upper mid-continent during the upcoming weekend with below normal temperatures widely anticipated during the next couple of weeks within the nation’s northeast quadrant,” consultancy Ritterbusch & Associates said in a note.
SUPPLY AND DEMAND
LSEG said average gas output in the Lower 48 states rose to 109.7 billion cubic feet per day (bcfd) so far in November, up from 107.4 bcfd in October and a record monthly high of 108.3 bcfd in August.
Record output this year has allowed energy companies to stockpile more gas than usual, with about 4% more gas in storage than is normal for this time of year.
LSEG projected average gas demand in the Lower 48 states, including exports, at 140.6 bcfd this week, which is much higher than 118.3 bcfd the prior week. Forecast for next week was slightly down at 136.5 bcfd.
Dutch and British wholesale gas prices edged higher, rebounding from an 18-month low on Thursday as weak storage levels provided support.
Asian spot liquefied natural gas prices hit their lowest level in eight weeks on continued muted demand and high inventories, tracking a drop in European gas prices on hopes of a Ukraine peace deal.
(Reporting by Noel John, Editing by Nick Zieminski and Nia Williams)