US natgas prices up 2% as hot weather boosts cooling demand (updated)

Equitrans Midstream

11/07/2023 19:57

(Adds latest prices)
       July 11 (Reuters) - U.S. natural gas futures climbed about 2% to a one-week high on Tuesday on a drop in daily 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 Tuesday, Wednesday and Thursday as homes and businesses crank up air conditioners to escape the latest heat wave. 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.
    In Appalachia, the nation's biggest shale gas-producing basin, U.S. energy company Equitrans Midstream  ETRN.N  said it is
evaluating all legal options, including an emergency appeal to the U.S. Supreme Court, after an appellate court halted construction of
the West Virginia-Virginia Mountain Valley gas pipeline in the Jefferson National Forest.
    Mountain Valley is the biggest project under construction in Appalachia and is key to unlocking more gas supplies in the
pipeline-constrained region.
    Front-month gas futures  NGc1  for August delivery on the New York Mercantile Exchange rose 6.2 cents, or 2.3%, to settle at
$2.731 per million British thermal units (mmBtu), their highest close 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 58.2%, the
lowest level since April 2022. 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 85.4% 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 102.1 billion cubic feet per day (bcfd)
so far in July, up from 101.0 bcfd in June. That is on track to top the monthly record high of 101.8 bcfd in May.
    On a daily basis, however, output fell 2.0 bcfd to a preliminary two-week low of 99.8 bcfd on Tuesday due to declines in Texas,
West Virginia and North Dakota. That would be the biggest one-day production drop since December 2022. Traders, however, noted that
preliminary data is often revised later in the day.
    U.S. gas production and demand will rise to record highs in 2023, the U.S. Energy Information Administration (EIA) said in its
Short Term Energy Outlook (STEO).
        EIA also projected 
    U.S. power consumption
     will ease in 2023 from last year's record high as slower economic growth and milder weather depress usage.
  
        Meteorologists forecast the weather in the Lower 48 states would remain hotter than normal through at least July 25.
    With hotter weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 100.4 bcfd this week to 105.9
bcfd next week.
    Gas flows to the seven big U.S. LNG export plants have risen to an average of 13.0 bcfd so far in July from 11.6 bcfd in June.
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.
            
                                                                      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                                                         2.71          2.67         7.19         6.54         2.89
 Title Transfer Facility (TTF)  TRNLTTFMc1                               9.47         10.04         51.76        40.50        7.49
 Japan Korea Marker (JKM)  JKMc1                                         12.06        12.08         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            4
 U.S. GFS CDDs                                                            252          254           239          212          203
 U.S. GFS TDDs                                                            253          255           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         101.9        102.3         97.1         90.5
 U.S. Imports from Canada                                                     7.9           4.7          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         106.6        110.1        105.8         98.8
                                                                                                                                      
 U.S. Demand (bcfd)                                                                                                                   
 U.S. Exports to Canada                                                       2.3           1.6          1.6          2.0          2.4
 U.S. Exports to Mexico                                                       6.5           5.5          6.6          6.0          5.5
 U.S. LNG Exports                                                            13.0          12.5         12.8         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          44.3         48.3         43.4         41.7
 U.S. Industrial                                                             21.3          21.3         21.4         21.3         21.1
 U.S. Plant Fuel                                                              5.0           5.0          5.1          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          80.9         84.9         79.8         78.2
 Total U.S. Demand                                                          103.1         100.4        105.9         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                                                                      6            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                                                                  19            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                                                      2.55          2.49                                       
 Transco Z6 New York  NG-CG-NY-SNL                                           1.81          1.54                                       
 PG&E Citygate  NG-CG-PGE-SNL                                                4.34          3.08                                       
 Eastern Gas (old Dominion South)  NG-PCN-APP-SNL                            1.61          1.35                                       
 Chicago Citygate  NG-CG-CH-SNL                                              2.30          2.02                                       
 Algonquin Citygate  NG-CG-BS-SNL                                            1.85          3.05                                       
 SoCal Citygate  NG-SCL-CGT-SNL                                              3.55          2.55                                       
 Waha Hub  NG-WAH-WTX-SNL                                                    2.21          1.98                                       
 AECO  NG-ASH-ALB-SNL                                                        1.90          1.76                                       
                                                                                                                                      
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                                                                 
 Hub                                                                  Current Day   Prior Day                                         
 New England  EL-PK-NPMS-SNL                                                32.75         45.50                                       
 PJM West  EL-PK-PJMW-SNL                                                   44.75         38.75                                       
 Ercot North  EL-PK-ERTN-SNL                                                34.00         40.75                                       
 Mid C  EL-PK-MIDC-SNL                                                      60.00         52.17                                       
 Palo Verde  EL-PK-PLVD-SNL                                                 45.00         23.75                                       
 SP-15  EL-PK-SP15-SNL                                                      47.25         25.00                                       
 
 (Reporting by Scott DiSavino; Editing by Paul Simao and Leslie Adler)
 ((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 ))