U.S. natural gas futures jumped about 9% on Monday on forecasts for colder weather and higher heating demand next week and worries about supplies from Canada related to U.S. President Donald Trump’s sanctions.
In 2024, about 9%, or roughly 8.4 billion cubic feet per day (bcfd) of the gas consumed in the U.S. came from Canada, according to the U.S. Energy Information Administration (EIA). That compares with average U.S. imports from Canada of around 7.6 bcfd during the prior five years (2019-2023).
Front-month gas futures for March delivery on the New York Mercantile Exchange rose 26.8 cents, or 8.8%, to $3.312 per million British thermal units (mmBtu) at 6:34 a.m. EST (1134 GMT). On Friday, the contract closed at its lowest since Dec. 4 for a second day in a row.
That futures price jump pushed the front-month out of technically oversold territory.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 105.7 bcfd so far in February, up from 102.5 in January when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.
Freeze-offs from Jan. 18-21 cut output by 6.9 bcfd to a one-year low of 96.9 bcfd on Jan. 21. All of the curtailed output was back in service by Jan. 28.
On a daily basis, however, output was on track to drop by around 0.7 bcfd over the past three days to 105.4 bcfd on Monday, down from an 11-month high of 106.1 bcfd on Friday. That compares with a daily all-time high of 106.4 bcfd in January 2024.
After extreme cold last week boosted heating demand to a record high, analysts said energy firms may have pulled a record amount of gas out of storage this month. The current record monthly storage withdrawal is 994 billion cubic feet in January 2022, according to federal energy data.
Meteorologists projected weather in the Lower 48 states would remain warmer than normal through Feb. 8, before turning mostly colder than normal from Feb. 9-18.
With colder weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, would rise from 125.1 bcfd this week to 133.8 bcfd next week. Those forecasts were higher than LSEG’s outlook on Friday.
The amount of gas flowing to the eight big U.S. liquefied natural gas export plants rose to an average of 15.3 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s invasion of Ukraine in February 2022.
Gas held near a 15-month high of around $16 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe. In Asia, meanwhile, gas was trading around $14 at the Japan Korea Marker (JKM) benchmark.
(Reporting by Scott DiSavino)