US natural gas futures on Friday climbed to a three-week high on stagnant production, rising exports and forecasts for slightly cooler but still near normal weather through mid-May. Front-month gas futures rose 3.7 cents, or 1.1 percent, to settle at $3.276 per million British thermal units, its highest close since April 6.

That put the contract up about 6 percent for the week, 3 percent for the month and 30 percent over an eight-month low of $2.522 in February on the possibility prices could spike later this year if low production and rising exports leave inventories unusually low before next winter. US production has remained at its lowest level since 2014 for four months. Over the past 30 days, it averaged 70.2 billion cubic feet per day, down from 72.2 bcfd during the same period a year earlier, 73.6 bcfd in 2015 and 67.7 bcfd in 2014, according to Reuters data.

US exports were expected to reach 7.9 bcfd this week, up more than 40 percent from a year earlier, according to Reuters data. That increase came even though a train at the Sabine Pass LNG export terminal was out of service for part of the week, according to traders. US gas consumption is projected to rise from 68.5 bcfd this week to 69.6 bcfd next week as the weather cools and heating demand edges up before collapsing to 66.0 bcfd in two weeks, which would be the least since May 2015, according to Reuters data.

Analysts said utilities likely added a near-normal 66 billion cubic feet of gas into storage during the week ended April 28. That compares with an increase of 68 bcf during the same week a year ago and a five-year average build of 63 bcf for that period. The increase would keep inventories about 15 percent above-normal for this time of year.

Over the next several months, however, analysts forecast stockpiles will decline rapidly as production remains stagnant, exports stay high and generators burn more gas than usual to keep air conditioners humming during a summer forecast to be warmer than usual. They project utilities will add just 1.7 trillion cubic feet to storage during the April-October injection season, much less than the five-year average of 2.1 tcf. If that forecast proves correct, storage at the end of October would reach just 3.7 tcf, well below the year-earlier record high of 4.0 tcf and the five-year average of 3.9 tcf. Traders said that prospect and the possibility of normally cold temperatures next winter after two unusually warm seasons have prompted money managers to boost bullish bets to their highest levels in three years.

Copyright Reuters, 2017