U.S. natural gas futures jumped almost 9% on Monday to a three-week high on forecasts for colder weather and higher heating demand over the next two weeks. Front-month gas futures rose 32.9 cents, or 8.8%, to settle at $4.060 per million British thermal units (mmBtu), their highest close since Dec. 3. The contract fell more than 6% on Thursday.
"Reversal from last week's profit taking is being driven by colder weather model runs," Robert DiDona of Energy Ventures Analysis said. "Overall, the discussion will focus on the short-term weather forecast. Futures will be highly dependent on this cold weather pattern setting up for H1 January. If we get the cold air pushing into the L48, prices have a chance to rise. If not, we will see selling."
Data provider Refinitiv estimated 420 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states, up from the 402 HDDs estimated on Friday. The normal is 437 HDDs for this time of year. HDDs, used to estimate demand to heat homes and businesses, measure the number of degrees a day's average temperature is below 65 Fahrenheit (18 Celsius).
Refinitiv projected average U.S. gas demand, including exports, would jump from 110.0 billion cubic feet per day (bcfd) this week to 126.7 bcfd next week as the weather turns seasonally colder. In recent months, global gas prices hit record highs as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet insatiable demand in Asia, where energy shortfalls have caused power blackouts in China.
The amount of gas flowing to U.S. LNG export plants has averaged 11.9 bcfd so far in December, now the sixth train at Cheniere Energy Inc's Sabine Pass plant in Louisiana is producing LNG. That compares with 11.4 bcfd in November and a monthly record of 11.5 bcfd in April.
Output in the U.S. Lower 48 has averaged 97.0 billion cubic feet per day (bcfd) so far in December, which would top the monthly record of 96.5 bcfd in November.
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