U.S. natural gas futures fell 3% on Nov. 27, weighed down by forecasts for warmer-than-usual weather and a steady rise in production. Front-month gas futures for January delivery slipped 8.8 cents, or 3%, at $2.873 per million British thermal units (Btu) by 10:07 a.m. EST (1507 GMT).
However, the contract is up nearly 9% so far this week, its biggest weekly percentage rise in four.
"The lack of real colder weather forecasts and a bountiful supply in the market when demand is not supposed to be very high is certainly curtailing prices," said Robert DiDona of Energy Ventures Analysis. "If we don't start getting some colder weather for the middle to second half of December, I think the January contract could continue to fall.”
Data provider Refinitiv estimated 365 heating degree days (HDDs) over the next two weeks in the lower 48 U.S. states, slightly below the 30-year average of 378. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 Celsius) and are used to estimate demand to heat homes and businesses. Gas production in the lower 48 U.S. states has averaged 90.3 billion cubic feet per day (Bcf/d) so far in November, up from a five-month low of 87.4 Bcf/d in October.
Rising oil prices over the last few months have prompted energy firms to drill for more crude. Those oil wells also produce a lot of associated gas.
Refinitiv projected gas demand, including exports, would rise to an average of 120.3 Bcf/d next week from an average around 113.3 Bcf/d forecast this week. Feedgas to the LNG export plants has averaged 9.9 Bcf/d so far in November, up from a five-month high of 7.7 Bcf/d in October, as rising prices in Europe and Asia in recent months have prompted global buyers to purchase more U.S. gas.
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