[Editor’s note: This story was updated at 4:53 p.m. CT Jan. 3.]
U.S. natural gas futures rose on Dec. 31, recording their best year since 2016, as forecasts for slightly colder weather and record LNG exports overshadowed a smaller-than-expected storage draw last week.
Front-month natural gas futures for February delivery gained 11.7 cents, or 4.8%, to settle at $2.539 per MMBtu. For the year, the contract is up 15.5%, its biggest yearly percentage rise since 2016. The market will be closed on Friday for New Year's Day.
The U.S. Energy Information Administration (EIA) said utilities pulled 114 Bcf of gas from storage during the week ended Dec. 25.
That was less than the 125 Bcf decline analysts forecast in a Reuters poll and compares with a decrease of 87 Bcf during the same week last year and a five-year (2015-19) average withdrawal of 102 Bcf.
“While demand is not expected to change much over the next few days, lower supply and the potential for a colder second half of January is giving the market a lift [today],” said Robert DiDona of Energy Ventures Analysis.
Data provider Refinitiv estimated 381 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states, up from the Dec. 29 forecast of 371 HDDs. The normal is 461 HDDs for this time of year. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). The measure is used to estimate demand to heat homes and businesses.
“Couple that insight with today being the last trading day of 2020 and we are seeing increased
volatility early in the session,” DiDona added.
However, Refinitiv projected average demand, including exports, would slip from 123 Bcf/d this week to 117.8 Bcf/d next week.
The amount of gas flowing to U.S. LNG export plants, meanwhile, has averaged 10.7 Bcf/d in December, which would top November's 9.8 Bcf/d record as rising prices in Europe and Asia in recent months have prompted global buyers to buy more U.S. gas.
Output in the Lower 48 has averaged 91.1 Bcf/d in December. That compares with a seven-month high of 91.1 Bcf/d in November 2020 and an all-time monthly high of 95.4 Bcf/d in November 2019.
U.S. Natural Gas Storage (Bcf) |
|||
| Week ended Dec. 25 (forecast) |
Week ended Dec. 18 (actual) |
Year ago Dec. 25 |
Five-year average Dec. 25 |
|
-125 |
-152 | -87 | -102 |
SNL U.S. Natural Gas Next-day Prices
|
||
| Hub | Current Day | Prior Day |
| Henry Hub | $2.36 | $2.40 |
| Transco Z6 New York | $2.32 | $2.37 |
| PG&E Citygate | $3.64 | $3.66 |
| Dominion South | $1.97 | $1.93 |
| Chicago Citygate | $2.31 | $2.28 |
| Algonquin Citygate | $2.48 | $3.14 |
| SoCal Citygate | $4.50 | $4.50 |
| Waha Hub | $2.43 | $2.12 |
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