"Latest American and European Ensemble weather models have confirmed strong cold anomalies in the 6-10 day period, with gas week January 4 now looking at around 70 heating degree days (HDD) higher than normal," said Robert DiDona of Energy Ventures Analysis. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). The measure is used to estimate demand to heat homes and businesses.
Thomson Reuters forecast US gas consumption will rise to an average of 135.7 billion cubic feet per day (bcfd) next week from 118.4 bcfd this week. Included in the consumption projection are US exports to Mexico and Canada via pipeline and to the rest of the world as liquefied natural gas. US sales abroad were expected to average 10.1 bcfd this week, up about 35 percent from the same week a year ago.
"Consensus of forecasts are favoring much below normal temperature patterns especially across the heavily populated northeast quadrant," said Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates. Despite the bullish weather outlooks, the market is experiencing much difficulty in sustaining even modest 10-15 cent price rallies with rising production increasingly evolving as a significant bearish consideration, he added.
Production in the lower 48 US states averaged an all-time high of 76.7 bcfd over the past 30 days, according to Reuters data. Daily output peaked at 77.2 bcfd last week. Analysts said US utilities probably pulled 113 billion cubic feet of gas from storage during the week ended on December 22.
That compares with a year-earlier decline of 233 bcf and a five-year average decrease of 111 bcf for that period. If correct, the decline would cut stockpiles to 3.331 trillion cubic feet, about 2.5 percent below the 3.417 tcf five-year average for this time of year.
Although the amount of gas in storage is a little less than usual for this time of year, traders said there was more than enough fuel to meet heating demand this winter, especially if production remains near record highs and the latest weather forecasts for the full season are correct. The National Weather Service projected temperatures would remain mostly seasonal across much of the country in December, January and February. That follows two of the warmest winters on record in 2015-2016 and 2016-2017.
Copyright Reuters, 2017