U.S. natural gas futures racked up a fifth straight daily gain to settle at their highest in more than a year, sparked by forecasts for colder weather into early December and the potential for disruptions to European liquified natural gas supplies.

"After an unseasonably warm fall, we're finally seeing some winter temperatures in most of the country, which has excited traders who thrive on volatility," according to Quantum Gas & Power Services president Beth Sewell.

Futures also were helped by the "first draw of the winter season" for U.S. natural gas supplies, as the Energy Information Administration reported a smaller than expected decline in inventories for last week.

Gas in underground storage slipped by 3 Bcf to 3,969 Bcf in the week ended November 15, compared to expectations for a 7 Bcf build in a Wall Street Journal survey, which was still smaller than the five-year average draw of 16 Bcf for the week.

Still, inventories are 6.4% higher than the five-year average, which means a lot of gas needs to burn before supply becomes a concern, which should keep prices mostly in check and help prevent winter heating bills from surging like they did two years ago.

Analysts said traders who had bet on prices falling also are contributing to the rally by buying futures to close out their short positions.

Front-month Nymex natural gas (NG1:COM) for December closed +4.5% to $3.339/MMBtu, its highest settlement value since November 3, 2023; gas has gained nearly 20% during its five-session winning streak.

ETFs: (NYSEARCA:UNG), (BOIL), (KOLD), (UNL), (FCG)

U.S. natural gas production is on track to decline in 2024 for the first time since 2020, but output should pick up in 2025, according to the EIA's latest outlook, as rising demand from liquefied natural gas export plants is expected to increase prices that had dropped to multi-decade lows.

The EIA projects annual average dry gas production will slide from a record 103.8 Bcf/day in 2023 to 103.3 Bcf/day in 2024 before rising to 104.5 Bcf/day in 2025, while total gas demand is seen increasing from a record 109.9 Bcf/day in 2023 to 111.2B cf/day in 2024 and 113.0B cf/day in 2025.

Rising demand for exports should push up average annual gas prices next year by more than 40% compared to 2024, according to analyst estimates.