US natgas prices climb 2% on forecasts for more demand
By Scott DiSavino
July 8 (Reuters) -U.S. natural gas futures climbed about 2% on Monday on forecasts for more demand next week than previously expected as a brutal heat wave continues to blanket much of the country, forcing power generators to burn more gas to produce electricity to keep air conditioners humming.
That price increase came despite forecasts for less demand this week than previously expected, rising output and a drop in the amount of gas flowing to liquefied natural gas (LNG) export plants after Freeport LNG in Texas ramped down ahead of Hurricane Beryl.
Hurricane Beryl lashed Texas with strong winds and heavy rain as it churned inland, forcing the closure of oil ports, cancellation of hundreds of flights and leaving nearly 2 million homes and businesses without power.
Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange rose 3.4 cents, or 1.5%, to $2.353 per million British thermal units (mmBtu) at 10:48 a.m. EDT (1448 GMT).
Even though prices were up for the first time in six trading days, futures remained in technically oversold territory for a fourth day in a row for the first time since February.
SUPPLY AND DEMAND
Higher prices in recent weeks, however, prompted some producers, including EQT EQT.N and Chesapeake Energy CHK.O, to start pulling more gas out of the ground.
EQT is the nation's biggest gas producer and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy SWN.N.
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.4 billion cubic feet per day (bcfd) so far in July.
That was up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May when many producers reduced drilling activities after prices fell to 3-1/2-year lows in February and March. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 23.
With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 105.7 bcfd this week to 107.0 bcfd next week. The forecast for this week was lower than LSEG's outlook on Friday, while the forecast for next week was higher.
Gas flows to the seven big U.S. LNG export plants fell to 12.1 bcfd so far in July after Freeport LNG in Texas ramped down ahead of Hurricane Beryl on Sunday, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine.
Gas was trading at $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $12 at the Japan Korea Marker (JKM) benchmark in Asia JKMc1. NG/EU
Week ended July 5 Forecast | Week ended June 28 Actual | Year ago July 5 | Five-year average July 5 | ||
U.S. weekly natgas storage change (bcf): | +52 | +32 | +57 | +57 | |
U.S. total natgas in storage (bcf): | 3,186 | 3,134 | 2,915 | 2,695 | |
U.S. total storage versus 5-year average | 18.2% | 18.8% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 2.32 | 2.32 | 2.64 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 10.53 | 10.50 | 9.58 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 12.49 | 12.42 | 11.44 | 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 | 3 | 2 | 3 | 3 | 4 |
U.S. GFS CDDs | 270 | 262 | 226 | 211 | 203 |
U.S. GFS TDDs | 273 | 264 | 229 | 214 | 207 |
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 | 102.0 | 102.5 | 102.2 | 102.1 | 95.5 |
U.S. Imports from Canada | 8.l | 7.9 | 7.1 | N/A | 7.8 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 110.0 | 11.04 | 109.4 | N/A | 112.5 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.7 | 1.3 | 1.4 | N/A | 2.3 |
U.S. Exports to Mexico | 6.6 | 6.7 | 6.8 | N/A | 6.1 |
U.S. LNG Exports | 12.4 | 11.8 | 12.1 | 13.0 | 8.6 |
U.S. Commercial | 4.3 | 4.3 | 4.4 | 4.4 | 4.5 |
U.S. Residential | 3.5 | 3.5 | 3.6 | 3.6 | 3.6 |
U.S. Power Plant | 41.9 | 49.0 | 49.6 | 44.5 | 43.3 |
U.S. Industrial | 21.6 | 21.6 | 21.7 | 21.3 | 21.3 |
U.S. Plant Fuel | 5.0 | 5.1 | 5.1 | 5.1 | 4.9 |
U.S. Pipe Distribution | 2.1 | 2.3 | 2.3 | 2.3 | 2.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 78.5 | 85.9 | 86.7 | 81.3 | 79.9 |
Total U.S. Demand | 99.1 | 105.7 | 107.0 | N/A | 96.9 |
N/A is Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam | Current Day % of Normal Forecast | Prior Day % of Normal Forecast | 2023 % of Normal Actual | 2022 % of Normal Actual | 2021 % of Normal Actual |
Apr-Sep | 75 | 75 | 83 | 107 | 81 |
Jan-Jul | 76 | 76 | 77 | 102 | 79 |
Oct-Sep | 78 | 78 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Jul 12 | Week ended Jul 5 | Week ended Jun 28 | Week ended Jun 21 | Week ended Jun 14 | |
Wind | 5 | 9 | 9 | 12 | 9 |
Solar | 6 | 6 | 5 | 6 | 6 |
Hydro | 6 | 6 | 5 | 6 | 7 |
Other | 1 | 1 | 1 | 1 | 1 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 47 | 43 | 43 | 40 | 41 |
Coal | 17 | 17 | 19 | 18 | 16 |
Nuclear | 18 | 18 | 17 | 17 | 19 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 2.02 | 2.06 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.44 | 1.33 | |||
PG&E Citygate NG-CG-PGE-SNL | 2.80 | 2.83 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.34 | 1.34 | |||
Chicago Citygate NG-CG-CH-SNL | 1.54 | 1.58 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.45 | 1.43 | |||
SoCal Citygate NG-SCL-CGT-SNL | 2.04 | 2.20 | |||
Waha Hub NG-WAH-WTX-SNL | 1.89 | -2.06 | |||
AECO NG-ASH-ALB-SNL | 0.46 | 0.53 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 28.00 | 30.50 | |||
PJM West EL-PK-PJMW-SNL | 41.00 | 42.50 | |||
Ercot North EL-PK-ERTN-SNL | 31.00 | 27.25 | |||
Mid C EL-PK-MIDC-SNL | 114.67 | 41.12 | |||
Palo Verde EL-PK-PLVD-SNL | 85.50 | 66.00 | |||
SP-15 EL-PK-SP15-SNL | 54.00 | 58.25 |
Reporting by Scott DiSavino
Editing by Peter Graff
For gas data on LSEG's Eikon 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 Eikon 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
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