US natural gas futures rose by about 2 percent on Friday, reaching a two-week high. The increase was driven by forecasts for cooler late-November weather, record gas flows to liquefied natural gas (LNG) export plants, and a recent decline in output. Front-month gas futures for December delivery on the New York Mercantile Exchange climbed 4.5 cents, or 2 percent, to USD2.992 per million British thermal units (mmBtu). This put the contract on track for its highest close since October 19.
For the week, the front-month contract was up about 3 percent, following a 10 percent gain the previous week. Financial firm LSEG reported that average gas output in the US Lower 48 states fell to 111.6 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October and a record high of 115.0 bcfd in August.
Despite record output and mild spring weather keeping gas inventories above the five-year average since March, hotter-than-normal summer weather reduced the surplus to just 1 percent above normal in mid-October. Recent mild weather and low demand have allowed energy firms to rebuild storage levels. Analysts estimate that gas in storage climbed to 2.1 percent above normal during the week ended November 6, up from 1.4 percent the previous week.
Looking ahead, meteorologists predict warmer-than-normal weather through November 21, which should keep heating demand lower than usual. However, LSEG forecasts that average gas demand in the Lower 48 states, including exports, will rise from 107.3 bcfd this week to 114.0 bcfd next week and 118.4 bcfd in two weeks. Average gas flows to the nine major US LNG export plants rose to 18.8 bcfd so far in November, up from 18.4 bcfd in October, and on track to tie the monthly record high of 18.8 bcfd in April.