US natgas prices slid 2% on mild weather and lower demand
Utilities likely injected more gas than usual for 5th week in a row
Winter is over - "widow maker" March-April spread on track for record low
Gas output in 2024 on track to decline for first time since 2020 pandemic
By Scott DiSavino
Nov 19 (Reuters) -U.S. natural gas futures slid about 2% on Tuesday on forecasts for mild weather and less heating demand over the next two weeks than previously expected.
Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange fell 4.3 cents, or 1.5%, to $2.930 per million British thermal units (mmBtu) at 7:53 a.m. EST (1253 GMT).
Analysts have said that mild weather so far this autumn should allow utilities to keep injecting more gas than usual into storage for the weeks ended Nov. 15 and possibly the week ending Nov. 22.
If correct, the week ended Nov. 15 would be the first time inventories rose by more than usual for five weeks in a row since October 2022.
There was currently about 7% more gas in storage than normal for this time of year. EIA/GAS NGAS/POLL
Looking ahead, the market is showing signs of giving up on thoughts that extreme cold could cause prices to spike this winter with futures for March 2025 trading at a record low premium over April 2025 NGH25-J25 of just 2 cents per mmBtu.
March is the last month of the winter storage withdrawal season and April is the first month of the summer storage injection season. Since gas is primarily a winter heating fuel, traders have said summer prices should not trade above winter.
If the March-April 2025 contract trades in contango, with the April contract priced higher than March, it could be the earliest switch from backwardation, with the March contract priced higher than April, in recent years.
The March-April 2024 spread did not trade in contango until Dec. 13. That compares with Jan. 25 for the March-April 2023 spread, never for the March-April 2022 spread and Dec. 8 for the March-April 2021 spread, according to seasonality data from LSEG.
The industry calls the March-April spread the "widow maker" because rapid price moves on changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states eased to 100.6 billion cubic feet per day (bcfd) so far in November, down from 101.3 bcfd in October. That compares with a record 105.3 bcfd in December 2023.
That puts annual output on track to decline in 2024 for the first time since the COVID-19 pandemic cut demand for the fuel in 2020.
Many producers reduced drilling activities so far this year after average spot monthly prices at the U.S. Henry Hub NG-W-HH-SNL benchmark in Louisiana fell to a 32-year low for the month of March, and have remained soft since then.
Meteorologists projected weather in the Lower 48 states will remain mostly warmer than normal through Nov. 27 before turning colder than normal from Nov. 28-Dec. 4.
With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 107.7 bcfd this week to 115.4 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.
The amount of gas flowing to the seven big operating U.S. LNG export plants rose to an average of 13.4 bcfd so far in November, up from 13.1 bcfd in October. That compares with a monthly record high of 14.7 bcfd in December 2023.
Week ended Nov 15 Forecast | Week ended Nov 8 Actual | Year ago Nov 15 | Five-year average Nov 15 | ||
U.S. weekly natgas storage change (bcf): | +20 | +42 | +12 | -16 | |
U.S. total natgas in storage (bcf): | 3,994 | 3,974 | 3,828 | 3,730 | |
U.S. total storage versus 5-year average | 7.1% | 6.1% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 2.96 | 2.97 | 3.06 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 14.48 | 14.61 | 14.45 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 14.65 | 14.25 | 17.02 | 14.39 | 14.31 |
LSEG Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days | |||||
Two-Week Total Forecast | Current Day | Prior Day | Prior Year | 10-Year Norm | 30-Year Norm |
U.S. GFS HDDs | 323 | 301 | 319 | 312 | 328 |
U.S. GFS CDDs | 6 | 8 | 6 | 9 | 7 |
U.S. GFS TDDs | 309 | 309 | 325 | 321 | 331 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2019-2023) Average For Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 99.6 | 101.9 | 101.9 | 105.7 | 98.0 |
U.S. Imports from Canada | 9.0 | 8.5 | 8.2 | N/A | 7.8 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 108.5 | 110.4 | 110.1 | N/A | 105.9 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 2.4 | 2.7 | 2.7 | N/A | 2.9 |
U.S. Exports to Mexico | 5.9 | 5.6 | 5.8 | N/A | 5.5 |
U.S. LNG Exports | 13.9 | 13.8 | 14.0 | 14.5 | 11.0 |
U.S. Commercial | 9.6 | 10.2 | 12.4 | 11.5 | 11.5 |
U.S. Residential | 13.7 | 15.4 | 19.5 | 17.4 | 16.8 |
U.S. Power Plant | 32.2 | 29.2 | 29.4 | 30.2 | 28.8 |
U.S. Industrial | 23.1 | 23.4 | 24.1 | 23.8 | 24.3 |
U.S. Plant Fuel | 4.9 | 5.0 | 5.0 | 5.0 | 5.3 |
U.S. Pipe Distribution | 2.3 | 2.3 | 2.5 | 2.3 | 3.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 85.9 | 85.7 | 92.9 | 90.3 | 90.0 |
Total U.S. Demand | 108.1 | 107.7 | 115.4 | N/A | 109.4 |
N/A is Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam | 2025 Current Day % of Normal Forecast | 2025 Prior Day % of Normal Forecast | 2024 % of Normal Actual | 2003 % of Normal Actual | 2022 % of Normal Actual |
Apr-Sep | 98 | 99 | 74 | 83 | 107 |
Jan-Jul | 98 | 96 | 76 | 77 | 102 |
Oct-Sep | 95 | 97 | 77 | 76 | 103 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Nov 22 | Week ended Nov 15 | 2023 | 2022 | 2021 | |
Wind | 15 | 13 | 10 | 11 | 10 |
Solar | 4 | 5 | 4 | 3 | 3 |
Hydro | 5 | 5 | 6 | 6 | 7 |
Other | 1 | 2 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 39 | 42 | 41 | 38 | 37 |
Coal | 13 | 14 | 17 | 21 | 23 |
Nuclear | 22 | 20 | 19 | 19 | 20 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 2.08 | 1.65 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.85 | 1.57 | |||
PG&E Citygate NG-CG-PGE-SNL | 4.39 | 3.07 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.67 | 1.48 | |||
Chicago Citygate NG-CG-CH-SNL | 1.88 | 1.48 | |||
Algonquin Citygate NG-CG-BS-SNL | 2.06 | 1.72 | |||
SoCal Citygate NG-SCL-CGT-SNL | 2.91 | 2.30 | |||
Waha Hub NG-WAH-WTX-SNL | 0.49 | 0.17 | |||
AECO NG-ASH-ALB-SNL | 1.03 | 0.73 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 39.25 | 36.25 | |||
PJM West EL-PK-PJMW-SNL | 32.25 | 24.25 | |||
Ercot North EL-PK-ERTN-SNL | 25.00 | 16.00 | |||
Mid C EL-PK-MIDC-SNL | 45.33 | 31.75 | |||
Palo Verde EL-PK-PLVD-SNL | 34.50 | 23.50 | |||
SP-15 EL-PK-SP15-SNL | 36.00 | 36.00 |
Reporting by Scott DiSavino
Editing by Bernadette Baum
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.
For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal
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
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
