US natgas prices drop 6% to 2-week low on rising output despite summer heat (updated)
20/06/2024 18:10
(Adds latest prices)
By Scott DiSavino
June 20 (Reuters) - U.S. natural gas futures dropped about 6% to a two-week low on Thursday with producers, including EQT
EQT.N and Chesapeake Energy CHK.O , slowly increasing output to meet higher demand as power generators burn more gas to meet
rising air conditioning use.
Front-month gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 16.8 cents, or 5.8%, to settle at
$2.741 per million British thermal units (mmBtu), their lowest close since June 4.
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.2 billion cubic feet per day
(bcfd) so far in June from a 25-month low of 98.1 bcfd in May. That compares with a monthly record high of 105.5 bcfd in December
2023.
Analysts said the production increase, which started in late May, was a sign drillers were slowly boosting output after a 47%
jump in futures prices in April and May. Prices were also up about 10% so far in June.
On a daily basis, output hit a 10-week high of 99.6 bcfd on June 17.
Overall, however, U.S. gas production was still down around 8% so far in 2024 after several energy firms, including EQT and
Chesapeake Energy CHK.O , delayed well completions and cut drilling activities when prices fell in February and March.
Earlier this week, Chesapeake CEO Nick Dell'Osso said at a fireside chat with JP Morgan that Chesapeake will be ready to
provide additional gas supplies to help meet the expected spike in power demand during an upcoming heatwave.
Dell'Osso said Chesapeake curtailed about 0.5 bcfd of production earlier this year. He said curtailments will decline
through the quarter, with none expected by the end of the year, subject to market conditions.
EQT EQT.N CEO Toby Rice said earlier this month that EQT has already started boosting output.
Chesapeake will overtake EQT as the biggest U.S. gas producer after its planned merger with Southwestern Energy SWN.N .
TROPICAL UPDATE
In other news, the U.S. National Hurricane Center (NHC) projected a 50% chance a tropical cyclone would form in the Gulf
of Mexico near Mexico's east coast over the next week and a 40% chance a cyclone would form in the Atlantic Ocean off the coasts
of Florida and Georgia.
The NHC also said Tropical Storm Alberto weakened into a depression as it moved inland over central Mexico from the Gulf
of Mexico.
Meteorologists projected weather across the Lower 48 states, meanwhile, would remain hotter than normal through at least
July 5.
LSEG forecast that heat would boost the amount of gas power generators in the Lower 48 burn to keep air conditioners humming,
including exports, from 97.8 bcfd this week to 103.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday
before the U.S. Juneteenth holiday on Wednesday.
Gas flows to the seven big U.S. LNG export plants rose to 13.0 bcfd so far in June, up from 12.9 bcfd in May.
But that remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing plant and pipeline
maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy's LNG.N Sabine Pass, Venture Global's
Calcasieu Pass.
Week ended Week ended Year ago Five-year
June 14 June 7 June 14 average
Forecast Actual June 14
U.S. weekly natgas storage change (bcf): +69 +74 +92 +83
U.S. total natgas in storage (bcf): 3,043 2,974 2,702 2,484
U.S. total storage versus 5-year average 22.5% 23.9%
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 2.84 2.91 2.47 2.66 3.60
Title Transfer Facility (TTF) TRNLTTFMc1 11.01 11.11 10.32 13.04 14.39
Japan Korea Marker (JKM) JKMc1 12.60 12.58 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 5 5 8 8 8
U.S. GFS CDDs 247 241 173 177 178
U.S. GFS TDDs 252 246 181 185 186
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 97.7 98.7 98.9 101.5 94.7
U.S. Imports from Canada 7.4 8.0 7.0 N/A 7.8
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 105.0 106.7 105.9 N/A 112.5
U.S. Demand (bcfd)
U.S. Exports to Canada 1.6 1.7 1.7 N/A 2.3
U.S. Exports to Mexico 7.0 6.9 7.1 N/A 6.0
U.S. LNG Exports 12.9 12.7 13.0 11.0 8.5
U.S. Commercial 4.5 4.5 4.4 4.4 4.8
U.S. Residential 3.8 3.8 3.7 3.7 4.3
U.S. Power Plant 37.0 39.5 45.1 38.6 36.3
U.S. Industrial 21.6 21.6 21.7 21.3 21.3
U.S. Plant Fuel 4.8 4.9 4.9 4.8 4.9
U.S. Pipe Distribution 2.0 2.0 2.2 2.0 1.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 73.8 76.4 82.0 74.9 73.6
Total U.S. Demand 95.4 97.8 103.8 N/A 90.4
N/A is Not Available
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 76 76 83 107 81
Jan-Jul 76 77 77 102 79
Oct-Sep 79 79 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jun 21 Jun 14 Jun 7 May 31 May 24
Wind 14 9 11 11 13
Solar 6 6 6 6 6
Hydro 6 7 7 7 7
Other 1 1 1 1 1
Petroleum 0 0 0 0 0
Natural Gas 38 41 41 40 38
Coal 17 16 15 14 14
Nuclear 18 19 19 20 19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 2.43 2.50
Transco Z6 New York NG-CG-NY-SNL 2.20 2.22
PG&E Citygate NG-CG-PGE-SNL 1.72 1.80
Eastern Gas (old Dominion South) NG-PCN-APP-SNL 1.95 1.98
Chicago Citygate NG-CG-CH-SNL 2.21 2.06
Algonquin Citygate NG-CG-BS-SNL 3.85 3.85
SoCal Citygate NG-SCL-CGT-SNL 1.55 1.65
Waha Hub NG-WAH-WTX-SNL 0.90 1.65
AECO NG-ASH-ALB-SNL 0.52 0.54
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England EL-PK-NPMS-SNL 99.00 80.25
PJM West EL-PK-PJMW-SNL 48.25 47.75
Ercot North EL-PK-ERTN-SNL 25.00 23.25
Mid C EL-PK-MIDC-SNL 41.69 30.67
Palo Verde EL-PK-PLVD-SNL 13.75 18.75
SP-15 EL-PK-SP15-SNL 12.75 17.00
(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 ))
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