U.S. natgas falls 4% to two-week low on rising output, less cold weather

CKX Lands

09/02/2022 13:30

Feb 9 (Reuters) - U.S. natural gas futures fell about 4% to a two-week low on Wednesday as output slowly
increases after weeks of reductions from freezing wells and on forecasts for slightly less cold weather and
lower heating demand than expected in the next two weeks.
    After weeks of near record volatility, front-month gas futures  NGc1  for March delivery fell 16.6 cents,
or 3.9%, to $4.082 per million British thermal units (mmBtu) at 8:13 a.m. EST (1313 GMT), putting the contract
on track for its lowest close since Jan. 25.
    In the spot market, frigid weather and high heating demand in the U.S. Northeast since the start of 2022
have kept next-day power and gas prices in New York  NG-CG-NY-SNL  and New England  NG-CG-BS-SNL 
 EL-PK-NPMS-SNL  at or near their highest levels since January 2018.  urn:newsml:reuters.com:*:nL1N2TR0X4  urn:newsml:reuters.com:*:nL1N2TN1OX
    Those high prices have made it economic for the region's power generators to burn lots of expensive oil
and liquefied natural gas (LNG) this winter.
    Data provider Refinitiv said output in the U.S. Lower 48 states fell from a record 97.3 billion cubic feet
per day (bcfd) in December to 93.9 bcfd in January and 90.8 bcfd in February after wells in several producing
regions froze, including the Permian in Texas and New Mexico, the Bakken in North Dakota and the Appalachia in
Pennsylvania, West Virginia and Ohio.  urn:newsml:reuters.com:*:nL1N2TJ23J
    On a daily basis, however, output has been rising almost daily since it dropped to 86.3 bcfd during a
winter storm on Feb. 4, its lowest since February 2021.
    With the weather turning seasonally less cold, Refinitiv projected average U.S. gas demand, including
exports, would drop from 130.0 bcfd this week to 122.6 bcfd next week. The forecast for this week was lower
than Refinitiv's outlook on Tuesday.
    The amount of gas flowing to U.S. LNG export plants rose to an average of 12.5 bcfd so far in February,
which would top the monthly record of 12.4 bcfd in January, as liquefaction trains at Venture Global LNG's
Calcasieu Pass plant in Louisiana enter service. A vessel arrived near Calcasieu on Monday and could pick up
the plant's first LNG cargo this week.  urn:newsml:reuters.com:*:nL1N2UI1T5
    Traders said demand for U.S. LNG would remain strong so long as global gas prices keep trading well above
U.S. futures as utilities around the world scramble for cargoes to meet surging demand in Asia and replenish
low inventories in Europe - especially with the threat that Russia could invade Ukraine and cut gas supplies
to Europe.  NG/GB   urn:newsml:reuters.com:*:nL1N2UD16S  urn:newsml:reuters.com:*:nL8N2RT64U  urn:newsml:reuters.com:*:nL1N2U52QX
    Russia provides 35%-40% of Europe's gas supplies, totaling about 16.3 bcfd in 2021, according to analysts
and U.S. energy data.  urn:newsml:reuters.com:*:nL8N2RT64U  urn:newsml:reuters.com:*:nL1N2U52QX
    Gas futures traded around $25 per mmBtu in Europe  TRNLTTFMc1  and Asia  JKMc1 , compared with just $4 in
the United States. But no matter how high global prices rise, the United States only has capacity to turn
about 12.4 bcfd of gas into LNG. The rest of the gas flowing to LNG facilities is used to run plant equipment.
    Global markets will have to wait until later this year when more of the 18 liquefaction trains under
construction at Calcasieu start producing LNG. The first trains at the plant started producing LNG in January.
 urn:newsml:reuters.com:*:nL1N2RV25Q  urn:newsml:reuters.com:*:nL1N2SN32X
    
                                              Week ended     Week ended     Year ago   Five-year        
                                                 Feb.         Jan. 28        Feb. 4     average    
                                              4(Forecast)     (Actual)                   Feb. 4    
 U.S. weekly natgas storage change (bcf):        -226           -268          -174        -150          
 U.S. total natgas in storage (bcf):             2,097          2,323        2,542       2,316          
 U.S. total storage versus 5-year average        -9.5%          -5.8%                                   
                                                                                                        
                                                                                                        
 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                                 4.09           4.25          2.92        3.73        2.89
 Title Transfer Facility (TTF)  TRNLTTFMc1       25.35          25.30         6.14       16.04        7.49
 Japan Korea Marker (JKM)  JKMc1                 25.31          25.10         7.36       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                                    392            395          556         403          396
 U.S. GFS CDDs                                     3              3            5           6            5
 U.S. GFS TDDs                                    395            398          561         409          401
                                                                                                        
 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                    93.1           90.5          91.2        87.8        83.3
 U.S. Imports from Canada                         9.3            9.4          9.1         9.2          8.9
 U.S. LNG Imports                                 0.1            0.2          0.1         0.1          0.2
 Total U.S. Supply                               102.5          100.1        100.4        97.1        92.4
                                                                                                        
 U.S. Demand (bcfd)                                                                                     
 U.S. Exports to Canada                           2.4            2.3          2.2         2.0          2.7
 U.S. Exports to Mexico                           5.8            5.4          5.7         6.0          4.8
 U.S. LNG Exports                                12.2           12.5          12.2        10.5         4.7
 U.S. Commercial                                 19.4           17.9          17.3        20.5        15.6
 U.S. Residential                                33.2           30.1          28.3        34.7        26.1
 U.S. Power Plant                                28.6           28.4          24.3        30.3        26.3
 U.S. Industrial                                 25.9           25.7          25.2        26.7        24.5
 U.S. Plant Fuel                                  4.6            4.5          4.5         4.4          4.6
 U.S. Pipe Distribution                           3.1            2.9          2.7         2.9          3.1
 U.S. Vehicle Fuel                                0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                          114.9          109.7        102.5       119.6        100.3
 Total U.S. Demand                               135.3          130.0        122.6       138.1        112.5
                                                                                                        
                                                                                                        
 U.S. weekly power generation percent by fuel - EIA                                                
                                              Week ended     Week ended    Week ended  Week ended  Week ended
                                                Feb 11          Feb 4        Jan 28      Jan 21      Jan 14
 Wind                                             12             11            9           11          10
 Solar                                             2              2            2           2            2
 Hydro                                             7              6            7           7            7
 Other                                             2              2            2           2            2
 Petroleum                                         1              1            1           1            1
 Natural Gas                                      33             33            35          33          34
 Coal                                             25             25            26          25          24
 Nuclear                                          18             19            19          19          20
                                                                                                   
                                                                                                   
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                                     
 Hub                                          Current Day     Prior Day                                 
 Henry Hub  NG-W-HH-SNL                          4.30           4.44                                    
 Transco Z6 New York  NG-CG-NY-SNL               4.50           4.90                                    
 PG&E Citygate  NG-CG-PGE-SNL                    4.70           4.81                                    
 Dominion South  NG-PCN-APP-SNL                  3.88           3.94                                    
 Chicago Citygate  NG-CG-CH-SNL                  4.07           4.11                                    
 Algonquin Citygate  NG-CG-BS-SNL                9.32           13.36                                   
 SoCal Citygate  NG-SCL-CGT-SNL                  4.17           4.06                                    
 Waha Hub  NG-WAH-WTX-SNL                        3.76           3.90                                    
 AECO  NG-ASH-ALB-SNL                            3.40           3.47                               
                                                                                                        
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                                   
 Hub                                          Current Day                                               
 New England  EL-PK-NPMS-SNL                    104.75         145.25                                   
 PJM West  EL-PK-PJMW-SNL                        29.50          26.50                                   
 Ercot North  EL-PK-ERTN-SNL                     38.50          31.00                                   
 Mid C  EL-PK-MIDC-SNL                           37.25          34.50                                   
 Palo Verde  EL-PK-PLVD-SNL                      40.75          40.00                                   
 SP-15  EL-PK-SP15-SNL                           40.50          40.25                                   
 
 (Reporting by Scott DiSavino; Editing by Edmund Blair)
 ((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 dropdown and the NORTH AMERICA dropdown 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 ))