U.S. natgas rises on forecasts for higher demand

U.S. natural gas futures ticked up on Thursday, regaining some ground from a slide to a seven-week low in the prior session, helped by forecasts for higher demand and a smaller-than-usual addition to inventories.  

Front-month gas futures were up 4.4 cents, or 0.9%, at $4.924 per MMBtu at 9:01 a.m. EST (1401 GMT).  

Data provider Refinitiv projected average U.S. gas demand, including exports, would jump from 96.9 Bft³ this week to 104.1 Bft³ next week as the weather turns seasonally colder and homes and businesses crank up their heaters.  

 "Yesterday's low injection number was marginally friendly as it reflects the market is still pretty tight, so Mother Nature is going to tell us which way this market is going to go next," said Thomas Saal, senior vice president for energy at StoneX Financial Inc.

Refinitiv forecast that the weather over the next two weeks would be in line with seasonally lower temperatures, with 284 heating degree days (HDDs), compared with a 30-year average of 286 HDDs for the period. HDDs, used to estimate demand to heat homes and businesses, measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius).

Thursday’s HDD estimate is higher than the prior day’s, adding further support to prices. U.S. gas stocks increased last week, the U.S. Energy Information Administration (EIA) said on Wednesday, but the build was smaller than usual for this time of year and was less than forecast.  

 In October, 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.

 U.S. futures climbed to a 12-year high in early October on expectations LNG demand would remain strong for months, but overseas prices rose by much more because the United States has plenty of gas in storage and ample production.

 Despite recent declines, gas prices in Europe and Asia were still trading about five times higher than in the U.S.

Refinitiv said output in the U.S. Lower 48 states has averaged 96.1 Bft³/d so far in November, up from 94.1 Bft³/d in October and a monthly record of 95.4 Bft³/d in November 2019.

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