Front-month gas futures fell 8.5 cents, or 3 percent, to settle at $2.795 per million British thermal units. For the week, the contract was down 5 percent after rising almost 11 percent last week. Gas demand in the lower 48 US states hit a record high of 141.7 billion cubic feet per day (bcfd) on Monday, New Year's Day, and has remained near that level all week, according to Thomson Reuters data.
Next week, however, Reuters projected gas consumption will drop to an average of 118.5 bcfd as the weather moderates. That is down from Thursday's forecast of 121.3 bcfd for next week and a projected average of 134.1 bcfd this week. Included in the consumption projections are US exports to Mexico and Canada via pipeline and the rest of the world as liquefied natural gas. US sales abroad were projected to average 8.5 bcfd this week, up 4 percent from a year earlier.
Production in the lower 48 US states averaged 76.1 bcfd over the past 30 days, down from an all-time 30-day average of 77.0 bcfd during the last week of December, according to Reuters data. Daily output peaked at 77.5 bcfd in mid-December. Freezing wells reduced US production by as much as 8 percent from that December peak to about 71.1 bcfd earlier in the week, but that has rebounded to a projected 72.7 bcfd on Friday, the data showed.
Analysts said utilities likely pulled a record 332 billion cubic feet of gas from storage during the frigid week ended January 5, the biggest withdrawal for any week ever, according to federal energy data going back to 1994. That compares with a decline of 151 bcf during the same week a year ago and a five-year average decrease of 162 bcf for that period. If correct, the decline would cut stockpiles to 2.794 trillion cubic feet, 11.5 percent below the 3.156 tcf five-year average for this time of year. That would be the least total gas in storage for that week since 2009.
Even though the amount of gas in storage is less than usual for this time of year, traders said supply was more than enough to meet heating demand this winter, especially if production remains at record highs and the latest weather forecasts for the rest of the season are correct. After this week, the National Weather Service projected temperatures would remain mostly seasonal for the rest of the winter.