US natgas prices up 3% to 7-week high on extreme cold forecasts (updated)
08/01/2024 19:58
(Adds latest prices)
By Scott DiSavino
Jan 8 (Reuters) - U.S. natural gas futures gained about 3.0% to a seven-week high on Monday on lower output and forecasts
for extremely cold weather next week to boost demand to a daily record high.
In addition to sky-high gas demand, extreme cold could cause production to drop by freezing oil and gas wells, pipes and
other energy equipment as happened in Texas in February 2021 and in Mid-Atlantic states in December 2022. The industry calls
freezing wells freeze-offs.
In volatile trade front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange rose 8.7 cents,
or 3.0%, to settle at $2.980 per million British thermal units (mmBtu), their highest since Nov. 16.
That put the contract up for a fifth day for the first time since October and kept it in technically overbought territory
for a third day in a row for the first time since November. Earlier in the session, the contract was down about 7%.
Even though the coldest part of winter is coming, many traders said winter futures for November-March likely already
peaked at $3.608 per mmBtu on Nov. 1 due primarily to recent record production and ample supplies of gas in storage.
Analysts said there was currently about 12.2% more gas in storage than normal for this time of year. EIA/GAS NGAS/POLL
In other news, U.S. energy companies Chesapeake Energy CHK.O and Southwestern Energy SWN.N are nearing a merger that
would create the biggest U.S. gas producer, ahead of current leader EQT EQT.N .
In Massachusetts, U.S. energy company Constellation Energy's CEG.O Everett liquefied natural gas (LNG) import terminal
took delivery of a second load of LNG from Trinidad this winter, according to data from financial firm LSEG.
SUPPLY AND DEMAND
LSEG said average gas output in the Lower 48 U.S. states fell to 107.7 billion cubic feet per day (bcfd) so far in January,
down from a monthly record of 108.5 bcfd in December.
Meteorologists projected the weather across the country would remain mostly warmer than normal through Jan. 12 before turning
colder than normal from Jan. 13-23.
As use of the fuel for heating increases, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from
137.2 bcfd this week to 158.4 bcfd next week. The forecasts for this week and next were higher than LSEG's outlook on Friday.
On a daily basis, total U.S. gas demand, including exports, was on track to reach 169.2 bcfd on Martin Luther King Day on Jan.
15 even though many businesses and government offices will close for the long U.S. holiday weekend, according to LSEG's latest
forecasts.
That was higher than LSEG projected last week and would top the current daily record of 162.5 bcfd set during Winter Storm
Elliott on Dec. 23, 2022, according to federal energy data from S&P Global Commodities Insights.
Gas flows to the seven big U.S. LNG export plants rose to an average of 14.8 bcfd so far in January, up from a monthly record
of 14.7 bcfd in December.) in Asia JKMc1 .
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global
prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine.
Gas was trading around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $11 at
the Japan Korea Marker (JKM) in Asia JKMc1 . NG/EU
Week ended Week ended Year ago Five-year
Jan 5 Dec 29 Jan 5 average
Forecast Actual Jan 5
U.S. weekly natgas storage change (bcf): -123 -14 -23 -89
U.S. total natgas in storage (bcf): 3,353 3,476 2,900 2,988
U.S. total storage versus 5-year average 12.2% 13.0%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2023 (2018-2022)
Henry Hub NGc1 2.79 2.89 3.42 2.66 3.60
Title Transfer Facility (TTF) TRNLTTFMc1 10.11 10.99 19.79 13.04 14.39
Japan Korea Marker (JKM) JKMc1 11.57 11.56 24.34 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 507 473 360 442 446
U.S. GFS CDDs 1 1 4 3 3
U.S. GFS TDDs 508 474 364 445 449
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 108.0 107.8 107.6 101.2 93.8
U.S. Imports from Canada8 9.1 9.4 9.7 9.3 9.3
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3
Total U.S. Supply 117.1 117.1 117.3 110.5 103.4
U.S. Demand (bcfd)
U.S. Exports to Canada 3.0 2.8 2.7 2.8 2.7
U.S. Exports to Mexico 5.3 4.9 5.0 4.8 5.3
U.S. LNG Exports 14.7 14.9 14.4 12.5 8.9
U.S. Commercial 15.7 16.7 22.1 14.9 16.6
U.S. Residential 26.0 28.4 38.5 24.1 28.6
U.S. Power Plant 36.3 35.4 38.5 29.9 29.5
U.S. Industrial 25.6 25.7 27.7 24.7 25.6
U.S. Plant Fuel 5.3 5.4 5.3 5.4 5.4
U.S. Pipe Distribution 3.0 3.0 3.6 3.0 2.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 112.0 114.6 136.2 102.1 108.7
Total U.S. Demand 134.9 137.2 158.4 122.2 125.6
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 79 78 83 107 81
Jan-Jul 81 80 77 102 79
Oct-Sep 82 81 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jan 12 Jan 5 Dec 29 Dec 22 Dec 15
Wind 7 8 11 11 11
Solar 2 2 2 2 3
Hydro 5 6 7 6 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 42 42 40 41 41
Coal 21 19 16 18 17
Nuclear 20 20 22 20 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 2.75 2.83
Transco Z6 New York NG-CG-NY-SNL 2.55 3.57
PG&E Citygate NG-CG-PGE-SNL 6.67 5.93
Eastern Gas (old Dominion South) NG-PCN-APP-SNL 2.39 2.31
Chicago Citygate NG-CG-CH-SNL 2.44 2.58
Algonquin Citygate NG-CG-BS-SNL 5.00 5.36
SoCal Citygate NG-SCL-CGT-SNL 5.55 5.64
Waha Hub NG-WAH-WTX-SNL 1.69 2.54
AECO NG-ASH-ALB-SNL 1.70 1.85
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England EL-PK-NPMS-SNL 58.25 58.75
PJM West EL-PK-PJMW-SNL 35.75 42.50
Ercot North EL-PK-ERTN-SNL 25.50 23.00
Mid C EL-PK-MIDC-SNL 115.00 57.25
Palo Verde EL-PK-PLVD-SNL 46.75 55.75
SP-15 EL-PK-SP15-SNL 46.25 56.25
(Reporting by Scott DiSavino; Editing by Alexander Smith; Editing by David Gregorio)
((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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