US natgas prices slide to two-week low on ample storage, lower demand
By Scott DiSavino
Aug 23 (Reuters) -U.S. natural gas futures slid about 2% to a two-week low on Friday on forecasts for lower demand this week than previously expected.
In addition, energy analysts noted the oversupply of gas 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 came despite forecasts for hotter-than-normal weather over the next two weeks that should prompt power generators to keep burning lots of gas to keep air conditioners humming.
Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 3.3 cents, or 1.6%, to $2.020 per million British thermal units (mmBtu) at 9:34 a.m. EDT (1334 GMT).
That put the contract down for a fourth day in a row and on track for its lowest close since Aug. 6 for a second consecutive day.
For the week, the front-month was down about 5% after easing about 1% last week.
In Canada, next-day gas prices at the AECO hub NG-ASH-ALB-SNL in Alberta fell to 20 cents per mmBtu, their lowest since hitting a record low of around 2 cents in August 2022, according to pricing data from financial firm LSEG going back to 1993.
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 spot Henry Hub 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 $2.02 so far in August, analysts said output would likely decline as some producers reduce drilling activities again.
Financial firm LSEG said gas output in the U.S. Lower 48 U.S. states slid to an average of 102.3 bcfd so far in August, down from 103.4 bcfd in July.
Meteorologists forecast weather across the country would remain mostly hotter than normal through Sept. 7.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 101.2 bcfd this week to 103.9 bcfd next week before sliding to 103.3 bcfd in two weeks. The forecast for this week was lower than LSEG's outlook on Thursday.
Gas flows to the seven big U.S. LNG export plants rose to 12.9 bcfd so far in August, up from 11.9 bcfd in July. That compares with a monthly record high of 14.7 bcfd in December 2023.
In a sign the U.S. could produce more LNG soon, a tanker full of LNG docked at Venture Global LNG's Plaquemines export plant under construction in Louisiana, according to data from LSEG. Analysts said the plant will likely use that LNG to prepare the plant for startup.
Week ended Aug 23 Forecast | Week ended Aug 16 Actual | Year ago Aug 23 | Five-year average Aug 23 | ||
U.S. weekly natgas storage change (bcf): | +36 | +35 | +28 | +43 | |
U.S. total natgas in storage (bcf): | 3,335 | 3,299 | 3,106 | 2,973 | |
U.S. total storage versus 5-year average | 12.2% | 12.6% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 2.02 | 2.05 | 2.65 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 11.86 | 11.96 | 11.21 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 13.75 | 13.79 | 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 | 5 | 5 | 3 | 6 | 10 |
U.S. GFS CDDs | 193 | 191 | 211 | 186 | 162 |
U.S. GFS TDDs | 196 | 196 | 214 | 192 | 175 |
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 | 101.8 | 101.8 | 103.6 | 96.3 |
U.S. Imports from Canada | 7.7 | 7.8 | 7.7 | N/A | 7.3 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 109.5 | 109.6 | 109.5 | N/A | 103.7 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.6 | 1.7 | 1.7 | N/A | 2.3 |
U.S. Exports to Mexico | 7.3 | 7.1 | 7.2 | N/A | 6.1 |
U.S. LNG Exports | 12.7 | 13.0 | 12.9 | 11.8 | 7.7 |
U.S. Commercial | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 |
U.S. Residential | 3.7 | 3.7 | 3.7 | 3.6 | 3.4 |
U.S. Power Plant | 43.8 | 42.1 | 44.5 | 45.3 | 43.0 |
U.S. Industrial | 21.8 | 21.9 | 21.9 | 21.5 | 21.7 |
U.S. Plant Fuel | 5.0 | 5.0 | 5.0 | 5.1 | 5.1 |
U.S. Pipe Distribution | 2.2 | 2.1 | 2.2 | 2.2 | 2.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 81.2 | 79.4 | 82.0 | 82.3 | 80.0 |
Total U.S. Demand | 102.8 | 101.2 | 103.9 | 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 | 75 | 74 | 83 | 107 | 81 |
Jan-Jul | 76 | 76 | 77 | 102 | 79 |
Oct-Sep | 78 | 77 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Aug 23 | Week ended Aug 16 | 2023 | 2022 | 2021 | |
Wind | 8 | 8 | 10 | 11 | 10 |
Solar | 6 | 6 | 4 | 3 | 3 |
Hydro | 5 | 6 | 6 | 6 | 7 |
Other | 1 | 1 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 45 | 45 | 41 | 38 | 37 |
Coal | 16 | 17 | 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 | 1.93 | 2.14 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.23 | 1.43 | |||
PG&E Citygate NG-CG-PGE-SNL | 2.28 | 2.34 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.29 | 1.38 | |||
Chicago Citygate NG-CG-CH-SNL | 1.51 | 1.62 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.45 | 1.55 | |||
SoCal Citygate NG-SCL-CGT-SNL | 1.54 | 1.67 | |||
Waha Hub NG-WAH-WTX-SNL | 1.15 | -0.41 | |||
AECO NG-ASH-ALB-SNL | 0.20 | 0.34 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 30.00 | 29.00 | |||
PJM West EL-PK-PJMW-SNL | 25.50 | 22.75 | |||
Ercot North EL-PK-ERTN-SNL | 27.25 | 31.50 | |||
Mid C EL-PK-MIDC-SNL | 20.00 | 42.00 | |||
Palo Verde EL-PK-PLVD-SNL | 22.50 | 31.00 | |||
SP-15 EL-PK-SP15-SNL | 21.25 | 30.50 |
Reporting by Scott DiSavino; Editing by Sharon Singleton
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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