U.S. natgas drops 11% as warmer weather forecast tempers demand view

  • 11/29/2021
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Nov 29 (Reuters) - U.S. natural gas futures slid more than 11% on Monday, erasing gains from a post-Thanksgiving rally in the previous session, hurt by forecasts for warmer-than-usual weather that could result in lower heating demand over the next two weeks. On their first trading day as the front-month, gas futures for January delivery dropped 62.3 cents or 11.4% to settle at $4.854 per million British thermal units (mmBtu).That was their biggest daily percentage decline since January 2019. "Fundamentally, it"s driven by the forecasted warmer-than-normal weather for the next couple of weeks," said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City. "However, this is very likely a temporary break given that the winter is still hiding its face and the international gas prices are much higher than we have here domestically." Data provider Refinitiv projected 321 heating degree days (HDDs) over the next two weeks compared with a 30-year normal of 366 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). Refinitiv said output in the U.S. Lower 48 states averaged 96.5 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019. However, Refinitiv forecasted that average U.S. gas demand, including exports, would rise from 112.0 bcfd this week to 116.2 bcfd next week as the weather turns seasonally colder and homes and businesses crank up their heaters. With gas prices around $30 per mmBtu in Europe and $35 in Asia , compared with about $5 in the United States, traders said buyers around the world will keep purchasing all the LNG the U.S. can produce. The amount of gas flowing to U.S. LNG export plants averaged 11.4 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc"s (LNG.A) Sabine Pass plant in Louisiana started producing LNG. That compares with a monthly record of 11.5 bcfd in April. read more

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