US natgas prices fall 4% on rising output, less heat forecast for next week
Adds closing prices
By Scott DiSavino
July 31 (Reuters) -U.S. natural gas futures slid about 4% on Wednesday on rising output and forecasts for less hot weather and lower gas demand next week than previously expected.
Theprice decline came despite forecasts for record-breaking heat later this week that could boost the amount of gas power generators burn to an all-time high.
Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 9.0 cents, or 4.2%, to settle at $2.036 per million British thermal units (mmBtu).
For the month, the contract was down about 22% after gaining about 48% during the prior three months.
In the spot market, gas prices at the Waha hub NG-WAH-WTX-SNL in the West Texas Permian Shale turned negative for a third time in July, even as a record-breaking heat wave could boost U.S. power demand to an all-time high as homes and businesses crank up air conditioners.
In the Pennsylvania-New Jersey-Maryland region, next-day power at the PJM West hub EL-PK-PJMW-SNL fell to $14 per megawatt hour, its lowest since April 2021.
Analysts said higher gas use by power generators could cause utilities to take the unusual step of pulling gas out of storage during the second week of August. That would be the first weekly storage withdrawal in August since 2006.
There was currently about 16% more gas in storage than normal for this time of year. EIA/GAS NGAS/POLL
Storage builds have been mostly smaller than usual in recent weeks, because several producers cut output earlier this year after futures prices dropped to 3-1/2-year lows in February and March.
Higher prices in April and May, however, prompted some drillers, including EQT EQT.N and Chesapeake Energy CHK.O, to slowly boost output.
But with prices down about 20% so far in July, some analysts think producers could decide to keep their drilling activities on hold for longer.
In other news, the U.S. National Hurricane Center said a tropical disturbance in the Atlantic Ocean has a 60% chance of strengthening into a cyclone that could hit the U.S. East Coast somewhere between Florida and SouthCarolina over the next seven days.
Analysts said an East Coast storm could reduce gas demand by cutting power use through outages and cooler weather.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 states rose to an average of 102.5 billion cubic feet per day (bcfd) so far in July, up from 100.2 bcfd in June and a 17-month low of 99.4 bcfd in May. U.S. output hit a monthly record of 105.5 bcfd in December 2023.
Meteorologists forecast temperatures across the Lower 48 states will average 83.5 degrees Fahrenheit (28.6 Celsius) on Aug. 1 and 83.9 F on Aug. 2, according to LSEG data.
That would top the daily record high average temperature of 83.0 F set on July 20, 2022, when power demand peaked at an all-time high of 742,600 megawatts, LSEG and federal energy data showed.
To keep air conditioners humming during that record heat, LSEG forecast power generators would burn about 54.8 bcfd of gas on Aug. 2, which would top the all-time high of 54.1 bcfd reached on July 9 when generators had to burn more gas due to a lack of wind power.
But the amount of wind power was on track to rise from 4% last week to around 10% this week.
With more heat coming, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 105.3 bcfd this week to 110.7 bcfd next week. The forecast for next week was lower than LSEG's outlook on Tuesday.
Week ended July 26 Forecast | Week ended July 19 Actual | Year ago July 26 | Five-year average July 26 | ||
U.S. weekly natgas storage change (bcf): | +31 | +22 | +15 | +33 | |
U.S. total natgas in storage (bcf): | 3,262 | 3,231 | 2,997 | 2,808 | |
U.S. total storage versus 5-year average | 16.2% | 16.4% | |||
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 | 2.14 | 2.13 | 2.64 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 11.08 | 10.94 | 9.58 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 12.48 | 12.45 | 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 | 3 | 1 | 2 | 3 |
U.S. GFS CDDs | 252 | 262 | 229 | 207 | 197 |
U.S. GFS TDDs | 255 | 265 | 230 | 209 | 200 |
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 | 102.5 | 102.8 | 102.9 | 102.3 | 95.5 |
U.S. Imports from Canada | 7.7 | 8.3 | 7.7 | N/A | 7.8 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 110.3 | 111.1 | 110.6 | N/A | 112.5 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.7 | 1.6 | 1.6 | N/A | 2.3 |
U.S. Exports to Mexico | 7.3 | 7.1 | 7.1 | N/A | 6.1 |
U.S. LNG Exports | 11.8 | 13.0 | 13.0 | 12.6 | 8.6 |
U.S. Commercial | 4.4 | 4.4 | 4.4 | 4.4 | 4.5 |
U.S. Residential | 3.5 | 3.6 | 3.6 | 3.5 | 3.6 |
U.S. Power Plant | 47.9 | 46.3 | 51.6 | 48.3 | 43.3 |
U.S. Industrial | 21.7 | 21.7 | 21.7 | 21.3 | 21.3 |
U.S. Plant Fuel | 5.1 | 5.1 | 5.1 | 5.0 | 4.9 |
U.S. Pipe Distribution | 2.3 | 2.2 | 2.4 | 2.2 | 2.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 84.9 | 83.5 | 88.9 | 84.8 | 79.9 |
Total U.S. Demand | 105.8 | 105.3 | 110.7 | 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 | 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 2 | Week ended Jul 26 | 2023 | 2022 | 2021 | |
Wind | 10 | 4 | 10 | 11 | 10 |
Solar | 5 | 5 | 4 | 3 | 3 |
Hydro | 5 | 5 | 6 | 6 | 7 |
Other | 1 | 1 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 44 | 48 | 41 | 38 | 37 |
Coal | 16 | 18 | 17 | 21 | 23 |
Nuclear | 18 | 17 | 19 | 19 | 20 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 1.81 | 1.90 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.57 | 1.48 | |||
PG&E Citygate NG-CG-PGE-SNL | 3.14 | 2.81 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.37 | 1.31 | |||
Chicago Citygate NG-CG-CH-SNL | 1.84 | 1.73 | |||
Algonquin Citygate NG-CG-BS-SNL | 2.35 | 1.92 | |||
SoCal Citygate NG-SCL-CGT-SNL | 2.03 | 2.09 | |||
Waha Hub NG-WAH-WTX-SNL | -1.16 | 1.32 | |||
AECO NG-ASH-ALB-SNL | 0.62 | 0.68 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 46.50 | 44.50 | |||
PJM West EL-PK-PJMW-SNL | 14.00 | 48.50 | |||
Ercot North EL-PK-ERTN-SNL | 26.25 | 24.50 | |||
Mid C EL-PK-MIDC-SNL | 67.00 | 47.00 | |||
Palo Verde EL-PK-PLVD-SNL | 44.00 | 31.25 | |||
SP-15 EL-PK-SP15-SNL | 41.50 | 30.25 |
Reporting by Scott DiSavino; Editing by David Holmes and Leslie Adler
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.