US natgas prices down 3% as low LNG feedgas offsets impact of extreme heat
12/07/2023 14:28
July 12 (Reuters) - U.S. natural gas futures slid about 3% on Wednesday as maintenance work limits the amount of gas flowing
to the country's liquefied natural gas (LNG) export plants.
That price decline occurred despite another daily drop in output and forecasts for hotter-than-normal weather to continue through
late July, especially in Texas.
The Electric Reliability Council of Texas (ERCOT), the state's power grid operator, projected electricity use would reach record
highs on Wednesday and Thursday as homes and businesses crank up air conditioners to escape the latest heatwave. The current record
was hit on June 27.
Extreme heat boosts the amount of gas generators have to burn to produce power for cooling, especially in Texas, which gets most
of its electricity from gas-fired plants.
In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear
(8%) and solar (4%), according to federal energy data.
Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange were down 7.7 cents, or 2.8%, to $2.654 per
million British thermal units (mmBtu) at 9:00 a.m. EDT (1300 GMT). On Tuesday, the contract closed at its highest level since June 30.
A lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 55.7%, the lowest
level since April 2022 for a second day in a row. On a daily basis, historic volatility hit a record high of 177.7% in February 2022
and a record low of 7.3% in June 1991.
Historic volatility has averaged 85.2% so far this year, a record high of 92.8% in 2022 and a five-year (2018-2022) average of
57.9%.
SUPPLY AND DEMAND
Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 102.0 billion cubic feet per day (bcfd)
so far in July, up from 101.1 bcfd in June. That is on track to top the monthly record high of 101.9 bcfd in May.
On a daily basis, however, output fell about 3.3 bcfd over the past five days to a preliminary three-week low of 99.5 bcfd on
Wednesday due mostly to declines in North Dakota, Pennsylvania and Texas. Traders, however, noted preliminary data is often revised
later in the day.
Meteorologists forecast the weather in the Lower 48 states would remain hotter than normal through at least July 26.
With hotter weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 100.1 bcfd this week to 105.7
bcfd next week.
Gas flows to the seven big U.S. LNG export plants have risen to an average of 12.9 bcfd so far in July from 11.6 bcfd in June. But
that is still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities, including Cheniere
Energy Inc's LNG.A Sabine Pass in Louisiana and Corpus Christi in Texas.
The U.S. is on track to become the world's biggest LNG supplier in 2023 - ahead of recent leaders Australia and Qatar - as much
higher global prices continue to feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's war in
Ukraine.
Gas was trading around $9 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $12 at the
Japan Korea Marker (JKM) in Asia JKMc1 . Those prices, however, were down about 60% so far this year after hitting record highs in
2022. NG/EU
Week ended Week ended Year ago Five-year
Jul 7 Jun 30 Jul 7 average
Forecast Actual Jul 7
U.S. weekly natgas storage change (bcf): 52 68 59 55
U.S. total natgas in storage (bcf): 2,929 2,877 2,361 2,566
U.S. total storage versus 5-year average 14.1% 14.6%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2022 (2017-2021)
Henry Hub NGc1 2.70 2.73 7.19 6.54 2.89
Title Transfer Facility (TTF) TRNLTTFMc1 9.17 9.74 51.76 40.50 7.49
Japan Korea Marker (JKM) JKMc1 12.02 12.06 39.36 34.11 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 1 1 2 3 3
U.S. GFS CDDs 265 252 239 212 204
U.S. GFS TDDs 266 253 241 215 207
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 102.1 101.5 101.9 97.1 90.5
U.S. Imports from Canada 7.9 7.9 7.8 8.7 8.2
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 110.0 109.4 109.7 105.8 98.8
U.S. Demand (bcfd)
U.S. Exports to Canada 2.3 1.5 1.5 2.0 2.4
U.S. Exports to Mexico 6.5 5.3 6.6 6.0 5.5
U.S. LNG Exports 13.0 12.3 12.5 11.1 6.1
U.S. Commercial 4.3 4.4 4.3 4.3 4.5
U.S. Residential 3.4 3.6 3.5 3.5 3.6
U.S. Power Plant 45.0 44.5 48.5 43.4 41.7
U.S. Industrial 21.3 21.2 21.4 21.3 21.1
U.S. Plant Fuel 5.0 5.0 5.0 5.0 5.0
U.S. Pipe Distribution 2.2 2.2 2.3 2.2 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 81.3 81.1 85.1 79.8 78.2
Total U.S. Demand 103.1 100.1 105.7 98.9 92.2
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2022 2021 2020
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 83 83 107 81 103
Jan-Jul 78 78 102 79 98
Oct-Sep 76 76 103 81 95
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jul 14 Jul 7 Jun 30 Jun 123 Jun 16
Wind 7 6 10 9 8
Solar 4 4 4 4 5
Hydro 5 6 6 6 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 44 45 43 42 43
Coal 19 19 18 17 16
Nuclear 18 18 17 19 19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 2.57 2.55
Transco Z6 New York NG-CG-NY-SNL 2.08 1.81
PG&E Citygate NG-CG-PGE-SNL 4.34 4.34
Eastern Gas (old Dominion South) NG-PCN-APP-SNL 1.69 1.61
Chicago Citygate NG-CG-CH-SNL 2.37 2.30
Algonquin Citygate NG-CG-BS-SNL 2.10 1.85
SoCal Citygate NG-SCL-CGT-SNL 3.43 3.55
Waha Hub NG-WAH-WTX-SNL 2.35 2.21
AECO NG-ASH-ALB-SNL 1.84 1.90
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England EL-PK-NPMS-SNL 49.50 32.75
PJM West EL-PK-PJMW-SNL 49.75 44.75
Ercot North EL-PK-ERTN-SNL 39.00 34.00
Mid C EL-PK-MIDC-SNL 55.00 60.00
Palo Verde EL-PK-PLVD-SNL 45.50 45.00
SP-15 EL-PK-SP15-SNL 49.00 47.25
(Reporting by Scott DiSavino; Editing by Paul Simao)
((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=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: 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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