Natural Gas Rises on Better Signs for Demand
Natural gas prices inched up for a second-straight day Friday, boosted by several positive signs for demand, analysts said.
Prices for the front-month January contract settled up 0.5 cent, or 0.2%, at $2.186 a million British thermal units on the New York Mercantile Exchange. Gas lost 1.2% for the week, its fourth-consecutive losing week.
Despite two-straight winning sessions, gas is up just 1% since Wednesday’s close.
Most of those gains came Thursday after the U.S. Energy Information Administration said stockpiles decreased by 53 billion cubic feet, more than the 51-bcf decline forecast by analysts and traders surveyed by The Wall Street Journal. That widely watched report indicates to traders that supply was smaller or demand was larger than expected, which helped support the market for a second day, analysts said.
Weather reports, while still showing widespread above-average temperatures, are starting to show colder weather creep into the forecast in mid-December. About half of U.S. homes use natural gas for heating, making winter cold and demand for heat the biggest drivers in the market.
Gas consumption from power plants also hit a fourth monthly record in a row, Simmons & Co. International said, citing data provider Bentek Energy. Power plants consumed 24.2 bcf a day in November, 4.7 bcf more than the same period a year ago when prices were 40% higher, Bentek said.
But that is in part balanced out by total demand falling behind its pace from last year by about 4 bcf a day, according to Bentek. Warmer temperatures have limited heating demand throughout the autumn, Simmons said. Prices dipped back into negative territory several times Friday and aren’t likely to move up substantially until the weather shows a more significant change, analysts said.
“It will be normal to cold at some point again this winter, but if it stays generally pretty mild it’s hard for prices to do anything,” said Eric Fell, senior natural gas analyst at Genscape Inc., a data provider.
https://www.wsj.com/articles/natural-gas-rises-on-better-signs-for-demand-1449244510