US natgas prices fall 3% to 3-week low on forecasts for lower demand
Adds latest prices
By Scott DiSavino
Aug 26 (Reuters) -U.S. natural gas futures fell about 3% to a three-week low on Monday on forecasts for lower demand next week than previously expected.
Energy analysts also noted the tremendous oversupply of gas still in storage has kept a lid on gas prices all year.
There was still about 12% more gas in storage than normal for this time of year 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
That price decline occurred despite forecasts for hotter-than-normal weather over the next two weeks that should prompt power generators to burn more gas than usual to keep air conditioners humming into mid-September.
Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 6.6 cents, or 3.3%, to settle at $1.956 per million British thermal units (mmBtu), their lowest close since Aug. 5.
That also put the contract down for a fifth day in a row for the first time since late July. The front-month fell about 13% during those five days.
Those declines boosted the premium of futures for October over September NGU24-V24 to 17 cents per mmBtu, a record high for a second day in a row.
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 29th time this year.
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.
Winter storms at the start of the year caused output to fall from a record 106.3 bcfd in December to 103.6 bcfd in January.
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 $2.00 so far in August, analysts said output would likely decline as some producers reduce drilling activities again.
Financial firm LSEG said gas output in the U.S. Lower 48 U.S. states has slid to an average of 102.4 bcfd so far in August, down from 103.4 bcfd in July.
LSEG forecast average gas demand in the Lower 48, including exports, will slide from 105.2 bcfd this week to 102.8 bcfd next week. The forecast for this week was higher than LSEG's outlook on Friday, while its forecast for next week was lower.
Week ended Aug 23 Forecast | Week ended Aug 16 Actual | Year ago Aug 23 | Five-year average Aug 23 | ||
U.S. weekly natgas storage change (bcf): | +36 | +35 | +28 | +43 | |
U.S. total natgas in storage (bcf): | 3,335 | 3,299 | 3,106 | 2,973 | |
U.S. total storage versus 5-year average | 12.2% | 12.6% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 1.97 | 2.02 | 2.65 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 12.12 | 12.03 | 11.21 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 13.82 | 13.75 | 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 | 4 | 5 | 4 | 10 | 13 |
U.S. GFS CDDs | 196 | 193 | 201 | 170 | 155 |
U.S. GFS TDDs | 200 | 198 | 205 | 180 | 168 |
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 | 102.3 | 102.5 | 103.7 | 96.3 |
U.S. Imports from Canada | 7.8 | 7.8 | 7.5 | N/A | 7.3 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 109.6 | 110.2 | 110.1 | N/A | 103.7 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.7 | 1.8 | 1.8 | N/A | 2.3 |
U.S. Exports to Mexico | 7.1 | 7.1 | 7.2 | N/A | 6.1 |
U.S. LNG Exports | 13.0 | 13.0 | 13.0 | 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 | 45.7 | 43.5 | 46.0 | 43.0 |
U.S. Industrial | 21.9 | 22.0 | 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 | 83.2 | 80.8 | 82.9 | 80.0 |
Total U.S. Demand | 102.3 | 105.2 | 102.8 | 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 | 75 | 83 | 107 | 81 |
Jan-Jul | 76 | 76 | 77 | 102 | 79 |
Oct-Sep | 77 | 78 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Aug 30 | Week ended Aug 23 | 2023 | 2022 | 2021 | |
Wind | 11 | 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 | 43 | 45 | 41 | 38 | 37 |
Coal | 15 | 16 | 17 | 21 | 23 |
Nuclear | 18 | 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 | 1.82 | 1.93 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.45 | 1.23 | |||
PG&E Citygate NG-CG-PGE-SNL | 1.86 | 2.28 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.30 | 1.29 | |||
Chicago Citygate NG-CG-CH-SNL | 1.58 | 1.51 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.56 | 1.45 | |||
SoCal Citygate NG-SCL-CGT-SNL | 1.27 | 1.54 | |||
Waha Hub NG-WAH-WTX-SNL | -0.68 | 1.15 | |||
AECO NG-ASH-ALB-SNL | 0.23 | 0.20 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 30.25 | 30.00 | |||
PJM West EL-PK-PJMW-SNL | 27.25 | 25.50 | |||
Ercot North EL-PK-ERTN-SNL | 24.00 | 27.25 | |||
Mid C EL-PK-MIDC-SNL | 19.50 | 20.00 | |||
Palo Verde EL-PK-PLVD-SNL | 12.00 | 22.50 | |||
SP-15 EL-PK-SP15-SNL | 10.75 | 21.25 |
Reporting by Scott DiSavino in New York; Editing by Paul Simao and Matthew Lewis
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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