U.S. natural gas futures traded below the previous session’s three-week high on Thursday as investors awaited a weekly storage report due later in the day.
Front-month gas futures for February delivery on the New York Mercantile Exchange were trading around $2.53 per million British thermal units as of 10:08 a.m. EST. Prices rose as much as 6.8% to hit a three-week high of $2.72 in the previous session.
“Mostly its the weather, that’s helping prices as we’ve seen some cold in U.S. maps creeping in, which is sort of eroding some of the bearish sentiments,” said Gary Cunningham, director of market research at Tradition Energy.
A further move in prices depends on the storage report, added Cunningham.
The U.S. Energy Information Administration (EIA) will release its weekly storage report at 10:30 a.m. EST (1530 GMT).
U.S. utilities likely pulled a smaller-than-usual 79 billion cubic feet (bcf) of natural gas out of storage last week as mild weather kept heating demand low, a Reuters poll showed on Wednesday. That compares with a withdrawal of 195 bcf during the same week a year ago and a five-year (2018-2022) average decrease of 123 bcf for this time of year.
Financial firm LSEG forecast U.S. gas demand in the Lower 48, including exports, at 120.5 billion cubic feet (bcfd) per day this week, down from last week’s 126.6 bcfd, weighed down by limited heating demand as businesses and government offices were shut for the Christmas week. However, demand was projected to rise to 130.7 bcfd during the next week as the forecast is for January to get colder.
LSEG said average gas output in the Lower 48 U.S. states has risen to 108.7 bcfd so far in December from a record 108.3 bcfd in November
Gas flows to the seven big U.S. LNG export plants have risen to an average of 14.6 bcfd so far in December, up from a record 14.3 bcfd in November.
Elsewhere, British and Dutch gas prices eased as mild temperatures for the time of year curbed demand and high gas storage levels weighed on the market.
(Reporting by Sherin Elizabeth Varghese in Bengaluru)