Front-month gas futures for January delivery on the New York Mercantile Exchange were up 12 cents, or 3.9%, to $3.20 per million British thermal units (mmBtu) at 9:01 a.m. EST (1401 GMT).
“Weather outlook for later in the month shifted significantly colder for the northeastern U.S., a key region for natural gas demands. That shift added to potential withdrawal projections and is helping support a push to the higher end of the range near $3.30,” said Gary Cunningham, director of market research at Tradition Energy.
The U.S. Energy Information Administration said utilities pulled 30 billion cubic feet (bcf) of gas out of storage during the week ended Nov. 29. Early estimates for the week ending Dec. 6 ranged from withdrawals of 49 bcf to 187 bcf, with an average decrease of 138 bcf. That compares with a withdrawal of 72 bcf during the same week last year and a five-year average decrease of 71 bcf.
“Much of this strength appears to represent another expected Arctic blast at about the middle of this week that will be prompting a larger-than-normal storage withdrawal next week that is apt to follow a sizable reduction in the surplus per this week’s data,” said Jim Ritterbusch of Ritterbusch and Associates in Florida.
“However, we are not expecting much upside follow through beyond today’s high because of another warm-up in the weather forecasts next week and possibly into the holiday period… some production slippage and steady export activity may be adding to today’s gains but don’t appear sufficient to spur additional strength unless accompanied by disrupted output due to freeze-offs.”
LSEG estimated 355 heating degree days over the next two weeks, lower than the forecast of 368 HDDs on Friday. It forecast average gas demand in the Lower 48, including exports, would drop from 130.5 bcfd this week to 126.7 bcfd next week.
The amount of gas flowing to the seven big operating U.S. LNG export plants has risen to an average of 14.2 bcfd so far in December, up from 13.6 bcfd in November. That compares with a monthly record high of 14.7 bcfd in December 2023.
Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 102.7 billion cubic feet per day (bcfd) so far in December, up from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
“We are also seeing some support for prices from hedging by European buyers who see the regime change in Syria as additional risk to supplies from a regional unrest perspective,” Cunningham added. Syrian rebels seized Damascus on Sunday, forcing President Bashar al-Assad to flee to Russia, ending 13 years of civil war and more than 50 years of Assad family rule.
Dutch and British wholesale gas prices were down on Monday morning on a warmer weather outlook and with the market shrugging off the geopolitical developments in Syria.
(Reporting by Anushree Mukherjee in Bengaluru; Additional reporting by Swati Verma; Editing by Paul Simao
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