US natgas prices drop 6% on forecasts for less demand over next two weeks (updated)

Southwestern Energy Co

04/06/2024 18:37

(Adds latest prices)
    By Scott DiSavino
       June 4 (Reuters) - U.S. natural gas futures dropped by about 6% on Tuesday, pressured by lowered demand forecasts for the
next two weeks and the tremendous oversupply of gas still in U.S. storage. Trade was volatile after prices soared by about 7% on
Monday to its highest close since May 22.
    Analysts forecast gas stockpiles were about 25% above normal for this time of year.  EIA/GAS   NGAS/POLL 
    Front-month gas futures  NGc1  for July delivery on the New York Mercantile Exchange fell 17.0 cents, or 6.2%, to settle at
$2.586 per million British thermal units (mmBtu).
    Energy traders noted prices fell despite a preliminary drop in output to a 19-week low over the past few days. Analysts,
however, noted that preliminary production data is often revised later in the day.
        Gas output in the Lower 48 U.S. states rose to an average of 98.1 billion cubic feet per day (bcfd) so far in June, the
same as in May, according to data from financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023.
    On a daily basis, however, output was on track to drop by about 2.6 bcfd over the past three days to a preliminary 19-week low
of 96.4 bcfd. Before this week, energy traders said there were signs output was rising due to a 47% jump in futures prices in
April and May. Output hit a six-week high of 99.5 bcfd on May 24.
    Overall, U.S. gas production was down around 9% so far in 2024 after several energy firms, including EQT  EQT.N  and
Chesapeake Energy  CHK.O , delayed well completions and cut drilling activities when prices fell to 3-1/2-year lows in February
and March.
    EQT is the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with
Southwestern Energy  SWN.N .
    Meteorologists projected weather across the Lower 48 states would remain warmer than normal through June 19 except for some
near-normal days from June 9-11.
        
                                                                   Week ended   Week ended    Year ago     Five-year         
                                                                     May 31       May 24       May 31       average         
                                                                    Forecast      Actual                    May 31     
 U.S. weekly natgas storage change (bcf):                             +86           +84         +105         +103           
 U.S. total natgas in storage (bcf):                                 2,881         2,795        2,520        2,312          
 U.S. total storage versus 5-year average                            24.6%         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                                                      2.81         2.76         2.47         2.66         3.60
 Title Transfer Facility (TTF)  TRNLTTFMc1                           11.14         11.63        10.32        13.04        14.39
 Japan Korea Marker (JKM)  JKMc1                                     12.05         11.91        10.61        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                                                         10           10           18           18           19
 U.S. GFS CDDs                                                        176           167          119          143          142
 U.S. GFS TDDs                                                        186           177          137          161          161
                                                                                                                             
 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                                             99.1         98.4         98.9        103.1         94.7
 U.S. Imports from Canada                                                  7.0          7.2          7.2          7.9          7.8
 U.S. LNG Imports                                                          0.0          0.0          0.0          0.0          0.0
 Total U.S. Supply                                                       106.1        105.6        106.1        111.0        112.5
                                                                                                                                  
 U.S. Demand (bcfd)                                                                                                               
 U.S. Exports to Canada                                                    1.8          1.9          2.0          2.1          2.3
 U.S. Exports to Mexico                                                    7.2          6.6          7.0          6.6          6.0
 U.S. LNG Exports                                                         13.1         13.2         13.0         11.8          8.5
 U.S. Commercial                                                           4.7          4.5          4.5          4.5          4.8
 U.S. Residential                                                          4.1          3.8          3.8          3.8          4.3
 U.S. Power Plant                                                         33.6         35.2         35.9         38.1         36.3
 U.S. Industrial                                                          21.6         21.6         21.6         21.2         21.3
 U.S. Plant Fuel                                                           4.9          4.9          4.9          4.9          4.9
 U.S. Pipe Distribution                                                    1.9          1.9          1.9          1.9          1.9
 U.S. Vehicle Fuel                                                         0.1          0.1          0.1          0.1          0.1
 Total U.S. Consumption                                                   70.9         72.0         72.8         74.5         73.6
 Total U.S. Demand                                                        93.0         93.7         94.8         95.0         90.4
                                                                                                                                  
                                                                                                                       
 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                                                               77           77           83           107          81
 Jan-Jul                                                               77           78           77           102          79
 Oct-Sep                                                               79           80           76           103          81
                                                                                                                        
                                                                                                                        
 U.S. weekly power generation percent by fuel - EIA                                                                               
                                                                   Week ended   Week ended   Week ended   Week ended   Week ended
                                                                     Jun 7        May 31       May 24       May 17       May 10
 Wind                                                                  10           11           13           10           13
 Solar                                                                 6             6            6            6            6
 Hydro                                                                 7             7            7            8            7
 Other                                                                 1             1            1            1            1
 Petroleum                                                             0             0            0            0            0
 Natural Gas                                                           39           40           38           40           41
 Coal                                                                  14           14           14           14           14
 Nuclear                                                               22           20           19           20           19
                                                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                                                          
 Hub                                                              Current Day    Prior Day                                   
 Henry Hub  NG-W-HH-SNL                                                   2.55         1.78                                       
 Transco Z6 New York  NG-CG-NY-SNL                                        1.54         1.20                                       
 PG&E Citygate  NG-CG-PGE-SNL                                             1.89         1.56                                       
 Eastern Gas (old Dominion South)  NG-PCN-APP-SNL                         1.42         1.15                                       
 Chicago Citygate  NG-CG-CH-SNL                                           1.52         1.22                                       
 Algonquin Citygate  NG-CG-BS-SNL                                         1.62         1.24                                       
 SoCal Citygate  NG-SCL-CGT-SNL                                           1.43         0.93                                       
 Waha Hub  NG-WAH-WTX-SNL                                                 1.52         0.08                                       
 AECO  NG-ASH-ALB-SNL                                                     0.85         0.72                                       
                                                                                                                                  
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                                                             
 Hub                                                              Current Day    Prior Day                                        
 New England  EL-PK-NPMS-SNL                                             28.00        22.75                                       
 PJM West  EL-PK-PJMW-SNL                                                47.00        22.75                                       
 Ercot North  EL-PK-ERTN-SNL                                             33.50        27.75                                       
 Mid C  EL-PK-MIDC-SNL                                                   28.36        23.50                                       
 Palo Verde  EL-PK-PLVD-SNL                                              22.25        -2.50                                       
 SP-15  EL-PK-SP15-SNL                                                   14.25        -6.50                                       
 
 (Reporting by Scott DiSavino; Editing by Will Dunham and David Gregorio)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922))
 
((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 ))