US natgas prices ease on record output, less hot forecasts
31/07/2023 15:03
July 31 (Reuters) - U.S. natural gas futures eased about
1% on Monday as output rose to a record high, forecasts
predicted less hot weather than previously expected for the next
two weeks, and several LNG export plants continued to operate at
less than full power.
Even though the forecasts were for less heat than previously
expected, the outlook is still for hotter than normal weather
through mid-August.
Friday was the hottest day so far this summer in the U.S.
Lower 48 states and the third hottest on record, according to
Refinitiv data going back to 2018. Refinitiv said temperatures
across the country averaged 82.2 degrees Fahrenheit (27.9
Celsius) on Friday, just shy of the 82.6 F on July 19, 2022, and
the record high of 83.0 F on July 20, 2022.
Extreme heat last week stressed electric grids and boosted
several spot power prices to their highest in months as homes
and businesses cranked up their air conditioners to escape a
brutal heatwave blanketing much of the country. The grids,
however, managed to keep the lights on and air conditioners
humming all week with few problems.
To keep that power flowing, U.S. generators burned a record
amount of gas to produce electricity for three days in a row
last week. Refinitiv said power generators burned about 53.4
billion cubic feet per day (bcfd) of gas on Friday, topping the
prior records of 52.9 bcfd on Thursday and 51.2 bcfd on
Wednesday, 50.3 bcfd on July 14 and 49.6 bcfd on July 20, 2022.
With the heatwave expected to linger in Texas, the Electric
Reliability Council of Texas, the state's grid operator,
forecast power demand would set new records on Monday and
Tuesday.
Front-month gas futures NGc1 for September delivery on the
New York Mercantile Exchange fell 1.7 cents, or 0.6%, to $2.621
per million British thermal units at 9:25 a.m. EDT (1325 GMT).
A lack of rapid price moves in recent weeks - futures
settled up or down 5% only three times in July - cut the
contract's 30-day implied volatility NGATMIV to 54.4%, its
lowest since March 2022.
The market uses implied volatility to estimate likely price
changes in the future. At-the-money 30-day implied volatility
NGATMIV , a determinant of an option's premium, averaged 75.4%
so far in 2023, down from 80.6% in 2022 and a five-year
(2018-2022) average of 53.2%.
For the month, the contract was on track to fall about 6%
after jumping about 23% in June.
Even though prices were down so far in July, speculators
last week boosted their net long gas futures and options
positions on the New York Mercantile and Intercontinental
Exchanges for the sixth time in seven weeks, according to the
U.S. Commodity Futures Trading Commission's Commitments of
Traders report.
SUPPLY AND DEMAND
Refinitiv said average gas output in the Lower 48 states
rose to 101.6 bcfd so far in July, up from 101.0 bcfd in June
but down from a monthly record of 101.8 bcfd in May due to
pipeline maintenance outages earlier in the month.
On a daily basis, however, output hit a record 102.8 bcfd on
Saturday, topping the prior daily high of 102.7 bcfd on July 4.
Meteorologists forecast the weather in the Lower 48 states
will remain mostly hotter than normal through at least Aug. 15.
Refinitiv forecast U.S. gas demand, including exports, would
rise from 106.9 bcfd this week to 107.4 bcfd next week as some
LNG export plants exit maintenance outages and start pulling in
more feedgas.
Gas flows to the seven big U.S. LNG export plants rose to an
average of 12.7 bcfd so far in July, up from 11.6 bcfd in June.
That, however, is still well below the monthly record of 14.0
bcfd in April.
Week Week Year Five
ende ended ago -yea
d Jul Jul r
Jul 21 28 aver
28 Actua age
Fore l Jul
cast 28
U.S. weekly natgas storage 24 16 37 37
change (bcf):
U.S. total natgas in storage 3,01 2,987 2,45 2,67
(bcf): 1 1 9
U.S. total storage versus 12.4 13.1%
5-year average %
Global Gas Benchmark Futures Curr Prior This Prio Five
($ per mmBtu) ent Day Mont r Year
Day h Year Aver
Last Aver age
Year age (201
2022 7-20
21)
Henry Hub NGc1 2.68 2.64 7.19 6.54 2.89
Title Transfer Facility 8.33 8.23 51.7 40.5 7.49
(TTF) TRNLTTFMc1 6 0
Japan Korea Marker (JKM) 10.7 10.97 39.3 34.1 8.95
JKMc1 8 6 1
Refinitiv Heating (HDD),
Cooling (CDD) and Total
(TDD) Degree Days
Two-Week Total Forecast Curr Prior Prio 10-Y 30-Y
ent Day r ear ear
Day Year Norm Norm
U.S. GFS HDDs 2 2 1 3 3
U.S. GFS CDDs 231 240 229 206 198
U.S. GFS TDDs 233 242 230 209 201
Refinitiv U.S. Weekly GFS
Supply and Demand Forecasts
Prio Curre Next This Five
r nt Week Week -Yea
Week Week Last r
Year Aver
age
For
Mont
h
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 101. 102.2 102. 99.0 90.5
3 1
U.S. Imports from Canada 7.6 7.6 7.4 8.9 8.2
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 108. 109.8 109. 107. 98.8
9 4 9
U.S. Demand (bcfd)
U.S. Exports to Canada 1.6 1.7 1.7 2.5 2.4
U.S. Exports to Mexico 6.6 6.5 6.7 5.7 5.5
U.S. LNG Exports 12.6 12.9 13.4 9.8 6.1
U.S. Commercial 4.4 4.4 4.4 4.4 4.5
U.S. Residential 3.5 3.5 3.6 3.5 3.6
U.S. Power Plant 49.1 49.0 49.0 44.4 41.7
U.S. Industrial 21.3 21.3 21.3 21.4 21.1
U.S. Plant Fuel 5.0 5.0 5.0 5.0 5.0
U.S. Pipe Distribution 2.3 2.3 2.3 2.2 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 85.7 85.8 85.7 81.0 78.2
Total U.S. Demand 106. 106.9 107. 99.0 92.2
6 4
U.S. Northwest River Curr Prior 2022 2021 2020
Forecast Center (NWRFC) at ent Day % % of % of % of
The Dalles Dam Day of Norm Norm Norm
% of Norma al al al
Norm l Actu Actu Actu
al Forec al al al
Fore ast
cast
Apr-Sep 83 83 107 81 103
Jan-Jul 77 77 102 79 98
Oct-Sep 75 75 103 81 95
U.S. weekly power generation
percent by fuel - EIA
Week Week Week Week Week
ende ended ende ende ende
d Jul d d d
Aug 28 Jul Jul Jul
4 21 14 7
Wind 7 7 7 7 6
Solar 4 4 4 4 4
Hydro 5 5 6 6 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 45 45 46 45 45
Coal 20 20 19 19 19
Nuclear 17 16 17 17 18
SNL U.S. Natural Gas
Next-Day Prices ($ per
mmBtu)
Hub Curr Prior
ent Day
Day
Henry Hub NG-W-HH-SNL 2.53 2.47
Transco Z6 New York 1.31 1.98
NG-CG-NY-SNL
PG&E Citygate 5.30 5.47
NG-CG-PGE-SNL
Eastern Gas (old Dominion 1.17 1.35
South) NG-PCN-APP-SNL
Chicago Citygate 2.31 2.41
NG-CG-CH-SNL
Algonquin Citygate 1.62 3.75
NG-CG-BS-SNL
SoCal Citygate 9.65 9.75
NG-SCL-CGT-SNL
Waha Hub NG-WAH-WTX-SNL 2.40 2.17
AECO NG-ASH-ALB-SNL 1.86 1.72
SNL U.S. Power Next-Day
Prices ($ per megawatt-hour)
Hub Curr Prior
ent Day
Day
New England EL-PK-NPMS-SNL 50.2 112.7
5 5
PJM West EL-PK-PJMW-SNL 40.2 122.0
5 0
Ercot North EL-PK-ERTN-SNL 250. 53.75
00
Mid C EL-PK-MIDC-SNL 135. 108.7
00 0
Palo Verde EL-PK-PLVD-SNL 174. 189.0
00 0
SP-15 EL-PK-SP15-SNL 110. 157.7
25 5
text_section_type="notes">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=usages
For Interactive Map, type 'Interactive Map' in the box at upper
left of the Reuters nEiko terminal
For graphics on Baker Hughes rig counts, see:
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
(Reporting by Scott DiSavino; Editing by Conor Humphries)
((mailto:scott.disavino@thomsonreuters.com; +1 332 219 1922;
Reuters Messaging:
rm://scott.disavino.thomsonreuters.com@reuters.net/))
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