US natgas prices climb 4% to 3-week high as output drops (updated)

Southwestern Energy Co

04/03/2024 19:58

(Adds latest prices)
    By Scott DiSavino
       March 4 (Reuters) - U.S. natural gas futures climbed about 4% to a three-week high on Monday as producers cut output after
prices collapsed to a 3-1/2-year low in recent weeks.
    Front-month gas futures  NGc1  for April delivery on the New York Mercantile Exchange rose 8.1 cents, or 4.4%, to settle at
$1.916 per million British thermal units (mmBtu), their highest close since Feb. 8.
    Prices collapsed to an intraday low of $1.511 per mmBtu on Feb. 27, their lowest since June 2020, as near record output, mild
weather and low heating demand allowed utilities to leave significantly more gas in storage than usual for this time of year.
    Analysts estimated current gas stockpiles were around 31% above-normal levels.  EIA/GAS   NGAS/POLL 
    A 14%-increase in gas prices last week prompted speculators to cut their net short futures and options positions on the New
York Mercantile and Intercontinental Exchanges for the first time in six weeks.
    That decline in shorts, however, came after speculators boosted those short positions two weeks ago to their highest since
March 2020 when futures prices were still plunging.
    In the spot market, meanwhile, next-day gas at the Henry Hub  NG-W-HH-SNL  benchmark in Louisiana fell to $1.47 per mmBtu, its
lowest since October 2020.
    
    SUPPLY AND DEMAND
    Financial company LSEG said gas output in the U.S. Lower 48 states fell to an average of 100.6 billion cubic feet per day
(bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record high of 105.5 bcfd in December 2023.
    Traders said the output drop showed that several energy firms, like Chesapeake Energy  CHK.O  - soon to be the biggest U.S.
gas producer after its merger with Southwestern Energy  SWN.N  - were following through on plans to cut gas drilling this year.
    Despite the expected decline in gas drilling, some analysts have warned gas output could still increase this year because oil
prices  CLc1  were high enough to encourage producers to keep drilling for oil in shale basins like the Permian in Texas and New
Mexico and the Bakken in North Dakota.
    The number of rigs drilling for oil rose last week to its highest since September 2023. Shale oil wells in the Permian and
Bakken produce a lot of associated gas.
    Meteorologists projected the weather across the Lower 48 states would remain mostly warmer than normal through March 17 before
turning seasonally normal on March 18-19.
    With cooler temperatures coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 111.5 bcfd
this week to 113.5 bcfd next week. Those forecasts were lower than LSEG's outlook on the Friday.
    Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants climbed to an average of 13.9 bcfd so far in March,
up from 13.7 bcfd in February. That compares with a monthly record of 14.7 bcfd in December.
    Analysts do not expect U.S. LNG feedgas to return to record levels until Freeport LNG is back at full power, which some market
watchers say could happen in mid-March.
        
                                                                   Week ended   Week ended    Year ago     Five-year         
                                                                     Mar 1        Feb 23        Mar 1       average    
                                                                    Forecast      Actual                     Mar 1     
 U.S. weekly natgas storage change (bcf):                             -34           -96          -72          -93            
 U.S. total natgas in storage (bcf):                                 2,340         2,374        2,054        1,783           
 U.S. total storage versus 5-year average                            31.2%         26.5%                                     
                                                                                                                             
                                                                                                                             
 Global Gas Benchmark Futures ($ per mmBtu)                       Current Day    Prior Day   This Month   Prior Year    Five Year
                                                                                              Last Year     Average      Average
                                                                                                             2023      (2018-2022)
 Henry Hub  NGc1                                                      1.98         1.84         2.41         2.66         3.60
 Title Transfer Facility (TTF)  TRNLTTFMc1                            8.22         8.15         13.72        13.04        14.39
 Japan Korea Marker (JKM)  JKMc1                                      8.30         8.37         13.59        14.39        14.31
                                                                                                                             
                                                                                                                             
 LSEG 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                                                        227           247          324          306          304
 U.S. GFS CDDs                                                         14           12           13           13           11
 U.S. GFS TDDs                                                        241           259          337          319          315
                                                                                                                             
 LSEG U.S. Weekly GFS Supply and Demand Forecasts                                                                            
                                                                   Prior Week     Current     Next Week    This Week    Five-Year
                                                                                   Week                    Last Year   (2019-2023)
                                                                                                                       Average For
                                                                                                                          Month
 U.S. Supply (bcfd)                                                                                                               
 U.S. Lower 48 Dry Production                                            102.3        100.8        101.5        101.8         95.1
 U.S. Imports from Canada                                                  8.3          7.6          8.6          8.6          8.4
 U.S. LNG Imports                                                          0.0          0.0          0.0          0.0          0.1
 Total U.S. Supply                                                       110.6        108.5        110.1        110.4        103.6
                                                                                                                                  
 U.S. Demand (bcfd)                                                                                                               
 U.S. Exports to Canada                                                    3.6          3.7          3.7          3.1          3.0
 U.S. Exports to Mexico                                                    7.7          6.9          7.6          5.6          5.4
 U.S. LNG Exports                                                         14.0         13.9         13.7         13.1          9.2
 U.S. Commercial                                                          12.9         10.2         10.9         12.7         12.3
 U.S. Residential                                                         20.0         15.3         16.3         20.2         19.4
 U.S. Power Plant                                                         30.2         30.8         30.0         30.9         23.8
 U.S. Industrial                                                          24.5         23.4         23.8         23.6         26.8
 U.S. Plant Fuel                                                           5.1          5.0          5.0          5.0          5.0
 U.S. Pipe Distribution                                                    2.5          2.3          2.4          2.3          2.3
 U.S. Vehicle Fuel                                                         0.1          0.1          0.1          0.1          0.1
 Total U.S. Consumption                                                   95.2         87.1         88.5         94.8         89.7
 Total U.S. Demand                                                       120.5        111.5        113.5        116.6        107.3
                                                                                                                                  
                                                                                                                       
 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam   Current Day   Prior Day       2023      2022         2021      
                                                                  % of Normal   % of Normal  % of Normal  % of Normal  % of Normal
                                                                    Forecast     Forecast      Actual       Actual       Actual
 Apr-Sep                                                               84           79           83           107          81
 Jan-Jul                                                               84           81           77           102          79
 Oct-Sep                                                               85           81           76           103          81
                                                                                                                        
                                                                                                                        
 U.S. weekly power generation percent by fuel - EIA                                                                               
                                                                   Week ended   Week ended   Week ended   Week ended   Week ended
                                                                     Mar 8         Mar 1       Feb 23       Feb 16        Feb 9
 Wind                                                                  19           16           13           11           14
 Solar                                                                 4             4            4            4            3
 Hydro                                                                 7             7            7            7            7
 Other                                                                 1             1            1            1            1
 Petroleum                                                             0             0            0            0            0
 Natural Gas                                                           35           38           40           41           38
 Coal                                                                  12           16           15           16           16
 Nuclear                                                               21           21           20           21           21
                                                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                                                          
 Hub                                                              Current Day    Prior Day                                   
 Henry Hub  NG-W-HH-SNL                                                   1.47         1.67                                       
 Transco Z6 New York  NG-CG-NY-SNL                                        1.40         1.47                                       
 PG&E Citygate  NG-CG-PGE-SNL                                             2.65         2.65                                       
 Eastern Gas (old Dominion South)  NG-PCN-APP-SNL                         1.30         1.37                                       
 Chicago Citygate  NG-CG-CH-SNL                                           1.47         1.47                                       
 Algonquin Citygate  NG-CG-BS-SNL                                         1.50         1.74                                       
 SoCal Citygate  NG-SCL-CGT-SNL                                           2.10         2.33                                       
 Waha Hub  NG-WAH-WTX-SNL                                                 0.67         0.53                                       
 AECO  NG-ASH-ALB-SNL                                                     1.26         1.26                                       
                                                                                                                                  
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                                                             
 Hub                                                              Current Day    Prior Day                                        
 New England  EL-PK-NPMS-SNL                                             26.00        29.75                                       
 PJM West  EL-PK-PJMW-SNL                                                25.00        29.25                                       
 Ercot North  EL-PK-ERTN-SNL                                             15.00        19.50                                       
 Mid C  EL-PK-MIDC-SNL                                                   64.00        45.60                                       
 Palo Verde  EL-PK-PLVD-SNL                                              15.25        14.50                                       
 SP-15  EL-PK-SP15-SNL                                                   13.75        13.50                                       
 
 (Reporting by Scott DiSavino; Editing by Richard Chang)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))
 
((For gas data on LSEG's Eikon type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.
For Interactive Map, type 'Interactive Map' in the box at upper left of the 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 ))