Natural gas futures rose Monday as weather forecasts called for sharply colder temperatures across the eastern half of the US over the next week.
On the New York Mercantile Exchange, natural gas for March delivery rose 11 cents, to $3.40 per million British thermal units, after earlier trading above $3.40 for the first time since early February.
The National Weather Service predicted that cold weather will hit the US over the next six to 10 days, with below-normal temperatures extending from as far west as Texas to Southern New England.
Concerns over high inventory levels are likely to keep weighing on prices. Last week, the US Energy Information Administration said that natural gas storage fell by 127 billion cubic feet (Bcf), more than the expected drop of 122 Bcf. Inventories fell by 155 Bcf in year-ago week, while five years ago they dropped by 140 Bcf.
Total US natural gas storage stood at 2.4 trillion cubic feet (Tcf) as of last week, 18 percent above the five-year average for this time of the year.
Meanwhile, global financial services provider Barclays said in a report on Friday that natural gas prices will likely hold relatively flat “since the winter is almost over” and colder weather will not be able to make a notable dent in US gas stockpiles.
Ukrainian Energy and Coal Industry Minister Eduard Stavytsky announced that during 2013 the country will begin purchasing natural gas from Turkmenistan, according to a local media source.
He noted that the aim of the move is to reduce Ukraine’s reliance on gas supplies from Russia; however, Moscow responded by stating that the move breaches the two countries’ energy agreement, which was signed in 2009. Under the terms of the agreement, Ukraine agreed to either import 52 billion cubic meters of Russian gas per year or pay for at least 80 percent of that volume in spite of the actual amount taken.
Houston-based NET Midstream announced that it will construct a 124-mile pipeline to transport natural gas from the Eagle Ford Shale region to the Mexican border.
The deal consists of a long-term agreement with MGI Supply, a subsidiary of Mexico’s state-owned gas company, Petroleos Mexicanos, to transport up to 2.1 billion cubic feet per day (Bcf/d) of gas. Development of the NET Mexico Pipeline will start this year and continue through 2014, with the pipeline coming online in December 2014.
The company said the discovery, located in Area 4, which is within the Mamba Complex at the Coral 3 delineation well, confirms the potential of Area 4 at 75 Tcf of gas in place. Eni added that it plans to drill another delineation well, Mamba South 3, to assess the full potential of the Mamba Complex discoveries. It will then resume exploration drilling in the southern sector of Area 4.