US natgas jumps nearly 5% on cold forecasts, big storage draw
Dec 28 (Reuters) - U.S. natural gas futures jumped nearly 5% on Thursday, boosted by forecasts for colder weather that would boost heating demand and a bigger-than-expected storage withdrawal.
Front-month gas futures for February delivery on the New York Mercantile Exchange settled up 12 cents, or 4.9%, at $2.56 per million British thermal units. In the previous session, prices rose as much as 6.8% to hit a three-week high of $2.72.
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The U.S. Energy Information Administration (EIA) said utilities pulled 87 billion cubic feet (bcf) of gas from storage during the week ended Dec. 22.
That was higher than the 79-bcf withdrawal analysts forecast in a Reuters poll and compares with a withdrawal of 195 bcf in the same week last year and a five-year (2018-2022) average decline of 123 bcf for this time of year.
"Mostly it's the weather, that's helping prices as we've seen some cold in U.S. maps creeping in, which is eroding some of the bearish sentiments," said Gary Cunningham, director of market research at Tradition Energy. "The 87 number that was printed by the EIA was a little above our expectations, but the market seems to have taken it just in stride, and it certainly didn't limit the rally that we already had going."
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 per day (bcfd) this week, down from last week's 126.6 bcfd, weighed 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 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.