US natgas prices ease to 4-month low on forecasts for less hot weather
By Scott DiSavino
Aug 28 (Reuters) -U.S. natural gas futures eased about 1% to a four-month low on Wednesday on forecasts for less hot weather over the next two weeks than previously expected, which should cut the amount of gas power generators need to burn to keep air conditioners humming.
Energy analysts also noted the tremendous oversupply of gas in storage for this time of year has kept a lid on prices all year.
There was still about 12% more gas in storage than normal even though weekly builds, including a rare decline during one week in August, have been smaller than normal in 13 of the past 14 weeks. EIA/GAS NGAS/POLL
On its last day as the front-month, gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 2.4 cents, or 1.3%, to $1.880 per million British thermal units (mmBtu) at 9:28 a.m. EDT (1328 GMT), putting the contract on track for its lowest close since April 26 for a second day in a row.
That also put the contract to fall a seventh day in a row for the first time since February, dropping about 16% during that time, and kept the front-month in technically oversold territory for a second day in a row for the first time since July.
Futures for October NGV24, which will soon be the front-month, were down about 1.8% to $2.05 per mmBtu.
In the spot market, pipeline constraints caused next-day gas prices at the Waha hub NG-WAH-WTX-SNL in the Permian Shale in West Texas to average in negative territory again for a record 30th time this year.
Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six in 2020 and once in 2023.
SUPPLY AND DEMAND
Producers increase and decrease output in reaction to prices, but it usually takes a few months for changes in drilling activity to show up in the production data.
Average monthly spot prices at the U.S. Henry Hub benchmark NG-W-HH-SNL in Louisiana hit a 12-month high of $3.18 per mmBtu in January before dropping to a 44-month low of $1.72 in February and a 32-year low of $1.49 in March, according to Reuters and federal energy data.
In reaction to that price plunge, producers cut average monthly output from 106.0 billion cubic feet per day (bcfd) in February to 102.7 bcfd in March, 101.5 bcfd in April, and a 17-month low of 101.3 bcfd in May, according to federal energy data.
As monthly Henry Hub spot prices increased to $1.60 per mmBtu in April, $2.12 in May, and $2.54 in June, some producers, including EQT EQT.N and Chesapeake Energy CHK.O, started to increase drilling activities, boosting output to 101.0 bcfd in June and 103.4 bcfd in July.
But with average spot Henry Hub prices back down to $2.08 per mmBtu in July and $2.01 so far in August, analysts said output would likely decline in coming months as some producers reduce drilling activities again.
Financial firm LSEG said gas output in the Lower 48 U.S. states slid to an average of 102.4 bcfd so far in August, down from 103.4 bcfd in July.
Meteorologists forecast weather across the country would remain mostly hotter than normal through Sept. 12. Energy traders, however, noted that hot weather at the start of September would only average around 78 degrees F (25.6 Celsius), versus around 83 F (28.3 C) at the start of August.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 105.8 bcfd this week to 102.9 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday.
Week ended Aug 23 Forecast | Week ended Aug 16 Actual | Year ago Aug 23 | Five-year average Aug 23 | ||
U.S. weekly natgas storage change (bcf): | +36 | +35 | +28 | +43 | |
U.S. total natgas in storage (bcf): | 3,335 | 3,299 | 3,106 | 2,973 | |
U.S. total storage versus 5-year average | 12.2% | 12.6% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 1.89 | 1.90 | 2.65 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 12.79 | 12.66 | 11.21 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 14.06 | 13.82 | 12.43 | 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 | 7 | 4 | 4 | 10 | 15 |
U.S. GFS CDDs | 173 | 185 | 201 | 170 | 150 |
U.S. GFS TDDs | 180 | 189 | 205 | 180 | 165 |
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 | 101.9 | 102.5 | 102.7 | 103.7 | 96.3 |
U.S. Imports from Canada | 7.8 | 8.2 | 7.7 | N/A | 7.3 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 109.6 | 110.7 | 110.4 | N/A | 103.7 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.7 | 1.7 | 1.7 | N/A | 2.3 |
U.S. Exports to Mexico | 7.1 | 7.2 | 7.2 | N/A | 6.1 |
U.S. LNG Exports | 13.0 | 12.9 | 12.8 | 12.5 | 7.7 |
U.S. Commercial | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 |
U.S. Residential | 3.7 | 3.7 | 3.6 | 3.6 | 3.4 |
U.S. Power Plant | 43.1 | 46.5 | 43.8 | 46.0 | 43.0 |
U.S. Industrial | 21.9 | 21.9 | 21.8 | 21.6 | 21.7 |
U.S. Plant Fuel | 5.0 | 5.1 | 5.1 | 5.0 | 5.1 |
U.S. Pipe Distribution | 2.1 | 2.2 | 2.1 | 2.1 | 2.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 80.5 | 84.0 | 81.1 | 82.9 | 80.0 |
Total U.S. Demand | 102.3 | 105.8 | 102.9 | N/A | 96.1 |
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 | 74 | 74 | 83 | 107 | 81 |
Jan-Jul | 76 | 76 | 77 | 102 | 79 |
Oct-Sep | 77 | 77 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Aug 30 | Week ended Aug 23 | 2023 | 2022 | 2021 | |
Wind | 7 | 8 | 10 | 11 | 10 |
Solar | 6 | 6 | 4 | 3 | 3 |
Hydro | 5 | 5 | 6 | 6 | 7 |
Other | 1 | 1 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 46 | 45 | 41 | 38 | 37 |
Coal | 17 | 16 | 17 | 21 | 23 |
Nuclear | 17 | 18 | 19 | 19 | 20 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 1.91 | 2.13 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.73 | 1.54 | |||
PG&E Citygate NG-CG-PGE-SNL | 2.27 | 3.61 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.59 | 1.40 | |||
Chicago Citygate NG-CG-CH-SNL | 1.65 | 1.90 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.84 | 1.74 | |||
SoCal Citygate NG-SCL-CGT-SNL | 1.56 | 2.85 | |||
Waha Hub NG-WAH-WTX-SNL | -0.98 | 1.06 | |||
AECO NG-ASH-ALB-SNL | 0.28 | 0.81 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 49.25 | 39.25 | |||
PJM West EL-PK-PJMW-SNL | 101.00 | 52.00 | |||
Ercot North EL-PK-ERTN-SNL | 30.75 | 24.50 | |||
Mid C EL-PK-MIDC-SNL | 30.67 | 70.33 | |||
Palo Verde EL-PK-PLVD-SNL | 39.00 | 86.00 | |||
SP-15 EL-PK-SP15-SNL | 29.50 | 62.00 |
Reporting by Scott DiSavino; editing by Jonathan Oatis
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
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.