US natgas prices soar 10% to 5-week high on output drop, jump in demand

By Scott DiSavino

Nov 11 (Reuters) - U.S. natural gas futures soared about 10% to a five-week high on Monday on a drop in daily output over the past few days and forecast for much cooler weather and more heating demand over the next two weeks than previously expected.

That heating demand should cause utilities to start pulling gas out of storage in late November.

There is currently about 6% more gas in storage than normal for this time of year. Analysts projected utilities added more gas than normal into storage last week for a fourth week in a row for the first time since October 2022. EIA/GAS NGAS/POLL

Prior to the last few weeks, storage injections had been smaller than usual for 14 weeks in a row because many producers have reduced drilling activities so far this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low for the month of March. Prices have remained relatively low since then, dropping to a 23-year low for the month of October.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange rose 27.6 cents, or 10.3%, to $2.945 per million British thermal units (mmBtu) at 10:52 a.m. EST (1552 GMT), putting the contract on track for its highest close since Oct. 3.

The tremendous gain, which was only the biggest daily percentage increase since prices soared 21% on Oct. 30, cut the premium of futures for January over December NGZ24-F25 to just 21 cents per mmBtu, the lowest since November 2022.

That jump in gas prices also boosted stock prices for several U.S. gas producers, including a 6% increase for Antero Resources AR.N and 4% increases for EQT EQT.N, Comstock Resources CRK.N and Range Resources RRC.N.

Even though gas futures have gained about 18% over the prior three weeks, speculators boosted their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for a second week in a row last week to their highest since April, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report.

In the spot market, gas prices plunged to a 25-year low at the Henry Hub benchmark NG-W-HH-SNL in Louisiana and dropped into negative territory for a record 47th time at the Waha hub NG-WAH-WTX-SNL in West Texas.

Elsewhere, next-day gas prices at the Eastern Gas South hub NG-PCN-APP-SNL in Pennsylvania fell about 20% to $1.00 per mmBtu, their lowest since October 2023.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states slid to 100.1 billion cubic feet per day (bcfd) so far in November from 101.3 bcfd in October. That compares with a record 105.3 bcfd in December 2023.

On a daily basis, output over the past three days fell by 2.3 bcfd to a preliminary nine-month low of 98.2 bcfd on Monday. Analysts have noted that preliminary data is often revised later in the day.

Meteorologists projected the weather in the Lower 48 states will switch from warmer than normal from now through Nov. 20 to near normal from Nov. 21-26.

With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 108.3 bcfd this week to 110.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Friday.

The amount of gas flowing to the seven big U.S. LNG export plants slid to an average of 13.0 bcfd so far in November, down from 13.1 bcfd in October. That compares with a monthly record high of 14.7 bcfd in December 2023.

(Reporting by Scott DiSavino; Editing by Andrea Ricci)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

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For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C