U.S. natural gas futures climbed about 3% to a one-week high on Thursday on near-record gas flows to liquefied natural gas export plants and a small decline in output over the past week or so.

Front-month gas futures for January delivery on the New York Mercantile Exchange rose 10.0 cents, or 2.5%, to $4.124 per million British thermal units (mmBtu), putting the contract on track for its highest close since December 11.

That price increase came ahead of a federal report expected to show last week’s storage withdrawal was much bigger than usual for this time of year as extreme cold boosted heating demand.

Analysts forecast energy firms pulled 169 billion cubic feet (bcf) of gas out of storage during the week ended December 12. That figure compares with a decline of 134 bcf during the same week last year and an average withdrawal of 96 bcf over the past five years (2020-2024).

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states eased to 109.5 billion cubic feet per day (bcfd) so far in December, down from a monthly record high of 109.6 bcfd in November.

Record output has allowed energy companies to stockpile more gas than usual so far this year, leaving the amount of fuel in storage at about 1% above normal.

Meteorologists forecast weather across the country would remain mostly warmer than normal through January 2, keeping the amount of gas needed to heat homes and businesses lower than usual for this time of year.

LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 144.8 bcfd this week to 128.8 bcfd next week. Those forecasts were lower than LSEG’s outlook on Wednesday.

Average gas flows to the eight large U.S. LNG export plants rose to 18.5 bcfd so far this month, up from a monthly record high of 18.2 bcfd in November.

The U.S. became the world’s biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.

Gas was trading near a 19-month low of around $9 per mmBtu at the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and near a 20-month low of around $10 at the Japan-Korea Marker (JKM) (JKMc1) in Asia.

Global prices have declined in recent weeks with the slow start of the winter heating season and hopes peace talks over Ukraine could result in the lifting of sanctions against Moscow.

That could allow Russia, the world’s second-biggest gas producer behind the U.S., to export more fuel in the future.
Source: Reuters