On Monday, US natural gas futures soared to the highest level in 15 weeks due to the forecast of cooler weather and slowing output.
Front-month gas futures for June delivery on the New York Mercantile Exchange jumped by 5.4% or 10.3 cents to settle at USD1.993/mBtu, the highest close since January 17. The balance for 2020 and calendar 2021 were also seen higher than the front-month on the prediction of governments’ easing restrictions.
Over the next two weeks, the weather is expected to be cooler than previously expected, which drove the heating demand higher.
Data provider Refinitiv estimated demand in the Lower 48 states, including exports, to increase from the average 84.2 bcfd this week, to 88.5 bcfd next week. Previously on Friday, the forecast was 79.5 bcfd for this week and 82.8 bcfd next week.
Other than that, natural gas output is predicted to be slower as drillers closed oil wells in shale basins as crude prices have collapsed by 67% since the beginning of the year.
The US Energy Information Administration (EIA) expected gas production to slump to an annual average of 91.7 bcfd this year, and to 87.5 bcfd next year from the record high of 92.2 bcfd in 2019.
Refinitiv reported that so far in May, the average gas production in the US lower 48 states slid down to 89.8 bcfd, down from April’s eight-months low of 92.8 bcfd.
So far in May, US natural gas exports to Canada have risen to 2.9 bcfd after posting the six-months low of 2.4 bcfd in April. The exports to Mexico, on the contrary, slumped by 4.1 bcfd so far this month after in April posting an 11-month low of 4.7 bcfd and a record 5.6 bcfd in March.
The US has exported an average of 7.2 bcfd so far this month, down from April’s four-months low of 8.1 bcfd and February’s record high of 8.7 bcfd.
