US natural gas futures rose on Wednesday along with the rest of the energy complex, with gas closing at its highest in a month as expectations for a small storage build offset forecasts for warmer-than-normal weather that could crimp gas demand. Front-month gas futures rose 6.5 cents, or 2 percent, to settle at $3.292 per million British thermal units, its highest close since April 6 and up about 31 percent from an eight-month low of $2.522 set in February.

US oil futures gained 3.2 percent on Wednesday to settle at their highest in a week. Investors anticipate that gas prices might spike later this year if stagnant production and rising exports leave inventories unusually low before next winter. Since the start of the year, US gas production has remained at its lowest level in three years, averaging just 70.8 billion cubic feet per day during the past 30 days. That compares with 71.9 bcfd during the same period in 2016 and 73.4 bcfd in 2015.

US exports were expected to reach 7.4 bcfd this week, up 19 percent from a year earlier, according to Reuters data. US gas consumption was projected to slide to 67.0 bcfd next week from 68.6 bcfd this week as the weather turns warmer-than-normal, causing cooling demand to exceed heating demand for the first time this year, the data showed. Traders noted it takes less gas to cool a house than to heat one.

Analysts estimate utilities put 53 billion cubic feet of gas into storage during the week ended on May 5, the least for that week since 2012. That compares with an increase of 58 bcf a year earlier and a five-year average build of 73 bcf for that period. If the estimate is correct, that would leave inventories about 14 percent above normal for this time of year. The US Energy Information Administration will release its weekly storage report at 10:30 am EDT on Thursday.

Meteorologists forecast this summer will be slightly warmer-than-normal but not quite as hot as last year, sparking expectations that power generators will use a little more gas than usual to keep air conditioners humming. Regardless of which fuel power generators use this summer, analysts forecast stagnant gas output and higher foreign sales will cause inventories to rise by only 1.6 trillion cubic feet 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 3.6 tcf, well below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf.

Copyright Reuters, 2017