Harvest Global Markets :

US natural gas futures reached a one-month high of $2.83/MMBtu in the first week of 2024, driven by increasing seasonal demand attributed to anticipated cold weather, especially in the Midwest expected between January 8-12. However, looking ahead, the Northern Hemisphere is projected to experience above-average temperatures due to the persistent El Nino pattern. Consequently, limited snowfall is expected in Canada, while North America will see higher temperatures. Additionally, record-high domestic production has enabled utilities to build reserves, with inventories currently 13% higher than the average. The latest EIA report revealed a smaller-than-expected storage draw last week due to milder-than-normal weather reducing heating demand. In 2023, US natural gas prices experienced a 39.2% decline. On Thursday, US natural gas futures rose about 4% to a one-month high, driven by decreased daily output and forecasts of colder weather leading to higher heating demand over the next two weeks than previously anticipated. This increase preceded a federal report expected to show a smaller-than-usual storage withdrawal for the week ended Dec. 29, with analysts forecasting US utilities pulled just 40 billion cubic feet (bcf) of gas out of storage. That contrasts with a withdrawal of 219 bcf in the same week last year and an average decline of 97 bcf over the five-year period from 2018 to 2022. Front-month gas futures for February delivery on the New York Mercantile Exchange rose by 10.4 cents, or 3.9%, reaching $2.772 per million British thermal units (MMBtu), putting the contract on course for its highest close since Dec. 1. Despite prices rising for a third consecutive day, and even though late January is typically the coldest part of the year, many traders suggested that winter futures for November-March likely peaked at $3.608 per MMBtu on Nov. 1, primarily due to recent record production and abundant gas supplies in storage. Financial firm LSEG reported that average gas output in the lower 48 US states had declined to 107.3 billion cubic feet per day (bcfd) so far in January, down from the monthly record of 108.5 bcfd in December. Meteorologists predicted that the weather would remain near to warmer than normal through Jan. 12 before turning colder than normal from Jan. 13-19. PJM coordinates electricity in large parts of the northeastern U.S. On Thursday, the EIA is anticipated to report a small 44-Bcf draw on storage for the week ending Dec. 29. Early trade in natural gas futures witnessed further increases, building on the gains from the previous session, as cold January weather is expected to boost demand and initiate a reduction in storage surpluses following a mild start to the winter season.