NYMEX November natural gas futures contract jumped 8.1 cents and settled at $3.242/MMBtu Monday, on storage related concerns.
The front-month contract traded between $3.177/MMBtu and $3.273/MMBtu so far in the session.
The front-month contract averaged $3.20/MMBtu in October thus far, up from the $2.917/MMBtu during the same time period in 2017.
The below-average "weather forecast over the next 10-15 days will not result in withdrawals but will certainly reduce the injections in the shoulder season, causing some concern in the market," said Kyle Cooper, an analyst at IAF Advisors.
Current national gas stocks sit at 2.956 Tcf, a 17% deficit to the five-year average of 3.563 Tcf, according to US Energy Information Administration data.
The storage build has averaged 59 Bcf/week since the beginning of April, down 10 Bcf from last year's average of 69 Bcf/week, the data showed. Winter withdrawals that extended deep into the traditional injection season earlier in the year and warmer-than-average fall temperatures are largely responsible for the weaker storage build, likely driving up prices as winter approaches.
The National Weather Service calls for a likelihood of temperatures below seasonal norms across much of the country over the next six to 10 days.
"The continuation of the cold weather may cause deliverability issues despite the elevated levels of production," Cooper said.
In October so far, production has averaged 83.4 Bcf/d, up nearly 10 Bcf from the 73.5 Bcf /d last year for the same time period, according to data from S&P Global Platts Analytics. On Monday, production is estimated to drop 200 MMcf day on day and stand at 83.2 Bcf.
Platts Analytics estimates output to remain largely stable at this level over the next two weeks. Output is likely to see a boost once the various shoulder season maintenance projects wrap up, offsetting some of the storage deficit.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
