U.S. natgas hits 14-year high on hotter forecasts, Russia export worries
26/07/2022 13:25
(Adds latest prices, quote)
July 26 (Reuters) - U.S. natural gas futures jumped to a 14-year high on Tuesday on forecasts for hotter
weather and higher than previously expected demand over the next two weeks, worries about Russian gas flows to
Europe and record coal prices.
The contract is on track to gain 69% in July, which would top the record gain of 63% in September 2009.
Extreme heat has already caused U.S. power demand to hit several all-time highs this summer in many
states, including Texas, as homes and businesses crank up their air conditioners. urn:newsml:reuters.com:*:nL1N2Z111K
To keep those air conditioners humming, electric companies were burning more gas than usual due to the
retirement of dozens of coal power plants in recent years and because coal prices CQNYMC1 were at record
highs, making it uneconomic for many generators to switch to some of the coal plants that remain.
The gas price increase came despite an increase in output to near record levels and the ongoing outage at
the Freeport liquefied natural gas (LNG) export plant in Texas, which has left more gas in the United States
for utilities to inject into low stockpiles. EIA/GAS NGAS/POLL
Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day
(bcfd) of gas before it shut on June 8. Freeport LNG estimated the facility will return to partial service in
October. Some analysts expect the outage to last longer. urn:newsml:reuters.com:*:nL1N2Z01UN urn:newsml:reuters.com:*:nL1N2YU1QW urn:newsml:reuters.com:*:nL1N2Z224T
On its second to last day as the front month, gas futures NGc1 for August delivery rose 42.4 cents, or
4.9%, to $9.151 per million British thermal units (mmBtu) at 9:08 a.m. EDT (1308 GMT), putting the contract on
track for its highest close since August 2008. Earlier in the session, the front-month hit its highest since
July 24, 2008.
That boosted the premium of futures for August over September NGQ22-U22 to a record high for a second
day in a row. The September NGU22 contract, which will soon be the front-month, was up 49 cents to $9.07 per
mmBtu.
So far this year, the gas front-month is up 150% as much higher prices in Europe and Asia keep demand for
U.S. LNG exports strong, especially since Russia's invasion of Ukraine.
Gas was trading around $55 per mmBtu in Europe TRNLTTFMc1 and at $39 in Asia JKMc1 . That put European
prices up about 10% on the expectation of further cuts in gas flows from Russia via the Nord Stream 1
pipeline. NG/EU
Russian gas exports on the three main lines into Germany - Nord Stream 1 (Russia-Germany), Yamal
(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route have held near
3.8 bcfd since July 21 when Nord Stream exited a maintenance outage, up from around 1.4 bcfd for the 10 days
the pipe was shut.
That was close to the 3.7 bcfd average during the month before Nord Stream shut but was still much lower
than the 9.4 bcfd average in July 2021. NG/EU urn:newsml:reuters.com:*:nL1N2Z2080 urn:newsml:reuters.com:*:nL8N2Z12JM urn:newsml:reuters.com:*:nL1N2Z01KT urn:newsml:reuters.com:*:nS8N2XR00O
urn:newsml:reuters.com:*:nL8N2Z2644 urn:newsml:reuters.com:*:nL1N2Z3194
TOP PRODUCER
U.S. gas futures lag far behind global prices because the United States is the world's top producer, with
all the fuel it needs for domestic use, while capacity constraints limit LNG exports.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 96.1 bcfd so far
in July from 95.3 bcfd in June. That compares with a monthly record high of 96.1 bcfd in December 2021.
Refinitiv projected average U.S. gas demand including exports would slide from 99.2 bcfd this week to 98.1
bcfd next week as extreme heat starts to ease in some parts of the country. Those forecasts were higher than
Refinitiv's outlook on Monday.
The average amount of gas flowing to U.S. LNG export plants eased to 11.0 bcfd so far in July from 11.2
bcfd in June due to reductions at Cheniere Energy Inc's LNG.A Sabine Pass and Venture Global LNG's Calcasieu
Pass plants in Louisiana this week.
Week ended Week ended Year ago Five-year
Jul 22 Jul 15 Jul 22 average
(Forecast) (Actual) Jul 22
U.S. weekly natgas storage change (bcf): +30 +32 +38 +32
U.S. total natgas in storage (bcf): 2,431 2,401 2,709 2,761
U.S. total storage versus 5-year average -12.0% -12.0%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2021 (2017-2021)
Henry Hub NGc1 8.99 8.73 3.82 3.73 2.89
Title Transfer Facility (TTF) TRNLTTFMc1 55.02 52.94 12.49 16.04 7.49
Japan Korea Marker (JKM) JKMc1 39.39 38.10 13.77 18.00 8.95
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year
Norm Norm
U.S. GFS HDDs 4 4 2 2 3
U.S. GFS CDDs 239 235 207 210 202
U.S. GFS TDDs 243 239 209 212 205
Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Week Next Week This Week Five-Year
Last Year Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 96.3 96.3 96.8 93.4 85.6
U.S. Imports from Canada 8.1 8.3 8.4 8.2 8.1
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 104.4 104.7 105.2 101.6 93.8
U.S. Demand (bcfd)
U.S. Exports to Canada 2.2 2.4 2.3 2.0 2.3
U.S. Exports to Mexico 6.2 5.9 6.1 6.5 5.2
U.S. LNG Exports 10.8 10.9 10.3 10.8 4.5
U.S. Commercial 4.4 4.4 4.4 4.4 4.4
U.S. Residential 3.5 3.6 3.6 3.5 3.6
U.S. Power Plant 45.7 43.7 43.1 42.1 39.6
U.S. Industrial 21.3 21.3 21.3 21.0 20.8
U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.7
U.S. Pipe Distribution 2.2 2.1 2.1 2.2 2.0
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 82.0 79.9 79.4 78.1 75.2
Total U.S. Demand 101.1 99.2 98.1 97.4 87.2
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jul 29 Jul 22 Jul 15 Jul 8 Jul 1
Wind
Solar
Hydro
Other
Petroleum
Natural Gas
Coal
Nuclear
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 8.52 8.25
Transco Z6 New York NG-CG-NY-SNL 7.90 8.75
PG&E Citygate NG-CG-PGE-SNL 9.48 8.97
Dominion South NG-PCN-APP-SNL 7.70 7.70
Chicago Citygate NG-CG-CH-SNL 8.23 8.06
Algonquin Citygate NG-CG-BS-SNL 8.19 9.30
SoCal Citygate NG-SCL-CGT-SNL 9.36 8.76
Waha Hub NG-WAH-WTX-SNL 8.12 7.63
AECO NG-ASH-ALB-SNL 4.68 4.77
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day
New England EL-PK-NPMS-SNL 100.00 155.75
PJM West EL-PK-PJMW-SNL 109.75 130.75
Ercot North EL-PK-ERTN-SNL 105.75 92.00
Mid C EL-PK-MIDC-SNL 130.00 126.00
Palo Verde EL-PK-PLVD-SNL 96.25 110.75
SP-15 EL-PK-SP15-SNL 99.75 105.00
(Reporting by Scott DiSavino; editing by Jason Neely)
((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging:
scott.disavino.thomsonreuters.com@reuters.net))
((For Refinitiv type ENERGY in Eikon search bar and then go to the GAS drop down and the NORTH AMERICA drop down or see: cpurl://apps.cp./cms/?pageid=usa-gas
For Interactive Map, type 'Interactive Map' in the box at upper left of the Reuters 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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