US natural gas futures climbed on Wednesday after forecasts for increased heating demand next week and as production dipped from an all-time monthly high. Front-month gas futures rose 4.5 cents, or 1.6 percent, to settle at $2.940 per million British thermal units. Thomson Reuters projected US gas consumption would rise to 72.4 billion cubic feet per day (bcfd) next week from 68.3 bcfd this week as the weather starts to turn cooler and homes and businesses turn up their heaters.

US dry gas output hit a monthly record high of 75.3 bcfd in September, but it has declined by about 1 bcfd so far this week. That topped the prior monthly record of 75.0 bcfd in April 2015 and was well above the 71.8 bcfd pulled out of the ground in September 2016, according to Reuters and federal energy data.

Drillers in Colorado and New Mexico cut output this week because they could not move the fuel to parts of California due to a pipeline break over the weekend, according to Southern California Gas, which owns the damaged pipe, traders and Reuters data.

The US National Hurricane Center said Tropical Depression 16 formed in the Caribbean Sea near Nicaragua and had the potential to strengthen into a Category 1 hurricane over the next four days as it moves toward the Gulf of Mexico and the coasts of Florida and Alabama.

That depression caused some energy firms, including BP and Shell, to pull non-essential workers from offshore production rigs in the eastern Gulf of Mexico. Traders said the storm had the potential to disrupt some production in the Gulf over the weekend. US gas exports were expected to average 8.0 bcfd this week, up 45 percent from a year earlier due primarily to higher liquefied natural gas shipments abroad, according to Reuters data.

Analysts said utilities likely added 51 billion cubic feet of gas into storage during the week ended September 29, below the 76 bcf increase in the year-earlier period and the five-year average of 91 bcf. If the forecast proves correct, it would put the total amount of gas in storage near the five-year average level for this time of year. Analysts estimated inventories would end the April-October injection season at just 3.8 trillion cubic feet (tcf) due to rising sales abroad.

That would fall short of the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. Some analysts said gas prices could spike later in the year if the coming winter is colder than the past two, prompting consumers to crank up their heaters. The last two snow seasons (2015-16 and 2016-17) were among the warmest on record. In their latest forecasts, meteorologists predicted temperatures would be warmer than usual in November and December, colder than average in January and near normal in February.

Copyright Reuters, 2017