US natgas prices soar 10% from 3-1/2-year low as Chesapeake cuts output

Southwestern Energy Co

21/02/2024 14:17

By Scott DiSavino
       Feb 21 (Reuters) - U.S. natural gas futures soared by
about 10% on Wednesday after Chesapeake Energy  CHK.O  - soon to
be the biggest U.S. gas producer after its merger with
Southwestern Energy  SWN.N  - cut the amount of gas it plans to
produce in 2024 due to the recent plunge in gas prices to a
3-1/2-year low.
    Chesapeake was just the latest gas producer to slash
spending and reduce rigs after gas prices dropped about 31% so
far in 2024 after falling 44% in 2023.
    Last week, gas producers Antero Resources  AR.N , Comstock
Resources  CRK.N  and EQT  EQT.N  said they also planned to 
reduce drilling this year.
    Chesapeake on Wednesday lowered it prior capital expenditure
guidance by about 20% through rig count reductions and deferring
well completions, which should cut gas production to around 2.7
billion cubic feet per day (bcfd) in 2024, down from around 3.5
bcfd in 2023.
    One billion cubic feet is enough gas to supply about five
million U.S. homes for a day.
    Still, analysts said gas output could actually increase in
2024 because crude prices  CLc1  were high enough to encourage
oil producers to drill in shale basins like the Permian in Texas
and New Mexico and the Bakken in North Dakota, where oil wells
produce a lot of associated gas.
    Gas prices fell so far this year because a mild winter kept
heating demand low, allowing stockpiles to remain at well above
normal levels, while output remained near record levels despite
an Arctic freeze in January that briefly cut output and caused
gas demand to soar to a record high.
    Analysts forecast U.S. gas stockpiles at around 22%
above-normal levels for this time of year.  EIA/GAS   NGAS/POLL 
    Front-month gas futures  NGc1  for March delivery on the New
York Mercantile Exchange rose 15 cents, or 9.5%, to $1.726 per
million British thermal units at 8:40 a.m. EST 1340 GMT),
putting the contract on track for its highest close since Feb.
12.
    On Tuesday, the contract closed at its lowest since June
2020, which was the height of COVID-19 demand destruction. 
    Wednesday's rise pushed the front-month out of technically
oversold territory for the first time in 11 days and would be
the biggest one-day percentage gain since April 2023 when prices
jumped 11.2%.

 (Reporting by Scott DiSavino; Editing by Andrea Ricci)
 ((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 ))