Nov 20 (Reuters) - U.S. natural gas futures rose 2% on Wednesday from a three-week low earlier in the week on forecasts for colder weather and higher heating demand in late November and early December than previously expected.
After falling over 6% earlier in the week on moderating weather forecasts, front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange were up 4.9 cents, or 2.0%, to settle at $2.559 per million British thermal units. On Tuesday, the contract fell to its lowest level since Oct. 28.
The premium of January futures over December NGZ19-F20 , meanwhile, fell to its lowest since February 2008.
Meteorologists forecast the weather over much of the U.S. Lower 48 states would transition from warmer than normal levels now to colder than normal starting around Nov. 27. That cold is expected to last through at least the first week of December.
With cooler weather coming, data provider Refinitiv projected average gas demand in the Lower 48 states, including exports, would rise from 107.5 billion cubic feet per day (bcfd) this week to 110.3 bcfd next week.
That demand forecast is a little higher than Refinitiv's predictions on Tuesday of 107.1 bcfd for this week and 110.2 bcfd for next week.
Gas flows to liquefied natural gas (LNG) export plants rose to 7.4 bcfd on Tuesday from 7.2 bcfd on Monday, according to Refinitiv data. That compares with an average of 7.0 bcfd last week and an all-time daily high of 7.7 bcfd on Nov. 2.
Pipeline flows to Mexico rose to 5.6 bcfd on Tuesday from 5.3 bcfd on Monday, according to Refinitiv data. That compares with an average of 5.6 bcfd last week and an all-time daily high of 6.2 bcfd on Sept. 18.
Analysts said utilities likely pulled 89 billion cubic feet (bcf) of gas from storage during the week ended Nov. 15, their first withdrawal of the November-March heating season.
That reduction compares with a withdrawal of 109 bcf during the same week last year and a five-year (2014-18) average decline of 32 bcf for the period. EIA/GAS
If correct, the decrease would cut stockpiles to 3.643 trillion cubic feet (tcf), 1.5% below the five-year average of 3.698 tcf for this time of year, erasing the small storage surplus built up over the prior five weeks.
Earlier this year, in March, the amount of gas in inventory was as much as 33% below the five-year average. But record production has allowed utilities to inject 2.569 tcf into storage since April 1, turning that big deficit into a small surplus during the week ended Oct. 11.
Analysts said stockpiles will likely return to a surplus over the five-year average during the next month or so as rising production enables utilities to leave more gas in storage.
Gas production in the Lower 48 states slipped to 94.5 bcfd on Tuesday from a record 95.2 bcfd on Monday, according to Refinitiv. That compares with an average of 94.7 bcfd last week.
In the spot market, meanwhile, next-day gas at the Southern (NYSE:SO) California citygate NG-SCL-CGT-SNL rose to its highest since March for a second day in a row. Temperatures in some cities in Southern California are expected to be about 10 degrees Fahrenheit (5 degrees Celsius) colder than normal on Wednesday, according to AccuWeather.
Week ended Week ended Year ago Five-year
Nov. 15
average
15(Forecast 8(Actual)
Nov. 15
U.S. natgas storage (bcf):
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Two-Week Total Forecast
Current Day Prior Day
Prior
10-Year
30-Year
Norm U.S. GFS HDDs
335 U.S. GFS CDDs
6 U.S. GFS TDDs
Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
Prior Week
Current
Next Week This week Five-Yea
last year
Average
Month U.S. Supply (bcfd)
U.S. Lower 48 Dry Production
76.3 U.S. Imports from Canada
7.9 U.S. LNG Imports
0.2 Total U.S. Supply
102.8
102.7
102.8
U.S. Demand (bcfd) U.S. Exports to Canada
2.4 U.S. Exports to Mexico
3.7 U.S. LNG Exports
1.5 U.S. Commercial
10.9 U.S. Residential
16.0 U.S. Power Plant
22.5 U.S. Industrial
22.8 U.S. Plant Fuel
4.7 U.S. Pipe Distribution
2.1 U.S. Vehicle Fuel
0.1 Total U.S. Consumption
100.9
79.1 Total U.S. Demand
116.3
107.5
110.3
104.5
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Current Day Prior Day
Henry Hub NG-W-HH-SNL
Transco Z6 New York NG-CG-NY-SNL
PG&E Citygate NG-CG-PGE-SNL
Dominion South NG-PCN-APP-SNL
Chicago Citygate NG-CG-CH-SNL
Algonquin Citygate NG-CG-BS-SNL
SoCal Citygate NG-SCL-CGT-SNL
Waha Hub NG-WAH-WTX-SNL
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Current Day Prior Day
New England EL-PK-NPMS-SNL
48.25
48.50
PJM West EL-PK-PJMW-SNL
39.60
40.11
Ercot North EL-PK-ERTN-SNL
20.50
24.00
Mid C EL-PK-MIDC-SNL
38.16
30.35
Palo Verde EL-PK-PLVD-SNL
40.25
39.50
SP-15 EL-PK-SP15-SNL
44.50
41.75