HomeNewsU.S. natgas prices drop 5% on forecasts for less demand

U.S. natgas prices drop 5% on forecasts for less demand

4/25/2024

(Reuters) - U.S. natural gas futures slipped about 5% on Wednesday on an outlook for reduced heating demand next week and on the eve of a closely watched weekly federal storage report.

Front-month gas futures <NGc1> for May delivery on the New York Mercantile Exchange were down 15.9 cents, or 8.8%, to settle at $1.65 per million British thermal units (mmBtu).

"This is just some repositioning ahead of storage report due tomorrow and along with that we are approaching the May contract expiration towards the end of April here," which is weighing down the natgas market, said Robert DiDona of Energy Ventures Analysis.

The U.S. Energy Information Administration (EIA) will release its weekly storage report at 10:30 a.m. ET (1530 GMT), Thursday.

Analysts forecast gas stockpiles were over 35% above normal levels for this time of year. [EIA/GAS][NGAS/POLL]

LSEG forecasts gas demand in the Lower 48 states, including exports, to fall to 92.7 bcfd next week from 98.0 bcfd this week.

In summers "as we progress into May and June, we will start to see higher electric demand, that will give us higher power burns and we start to move out of these maintenance events and if LNG production doesn't grow or respond higher, we are likely to see tighter balances, which will help reduce the current storage overhang," DiDona added.

On a daily basis, LNG feedgas was at 12.4 bcfd as the amount of gas flowing to Freeport LNG climbs to 0.5 bcfd from 0.1 bcfd on Friday.

The first tanker in 12 days set sail from Freeport LNG's Texas export terminal on Tuesday, signaling the resumption of gas processing after an outage earlier this month.

Freeport LNG has been plagued with issues since Winter Storm Heather damaged equipment earlier in January, ANZ Research said in a note.

"There are signs that production may resume shortly, we don’t expect it to be back to full capacity for a couple of months," ANZ added.

Financial firm LSEG said gas output in the Lower 48 U.S. states have fallen to an average of 96.8 billion cubic feet per day (bcfd) in April from 100.8 bcfd in March. That compares with a monthly record of 105.6 bcfd in December 2023.

U.S. gas production has dropped by around 10% in 2024 as several energy firms, including EQT<EQT.N> and Chesapeake Energy<CHK.O>, delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in February and March.

EQT is currently the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy<SWN.N>.

Meanwhile, in Europe gas prices traded higher, as planned and unplanned outages in Norway and Britain tightened the supply picture, offsetting a return to milder temperatures. [NG/EU]

 

Week ended Apr 19 Forecast

Week ended Apr 12 Actual

Year ago Apr 19

Five-year average

Apr 19

  

U.S. weekly natgas storage change (bcf):

+64

+50

+77

+59

  

U.S. total natgas in storage (bcf):

2,397

2,333

1,986

1,770

  

U.S. total storage versus 5-year average

35.4%

36.4%

      
           
           

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2023

Five-Year Average (2018-2022)

Henry Hub <NGc1>

1.80

1.80

2.20

2.66

3.60

Title Transfer Facility (TTF) <TRNLTTFMc1>

8.82

10.53

13.49

13.04

14.39

Japan Korea Marker (JKM) <JKMc1>

10.23

10.50

12.34

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 Norm

30-Year Norm

U.S. GFS HDDs

71

89

130

155

157

U.S. GFS CDDs

70

59

30

36

33

U.S. GFS TDDs

141

148

160

191

190
           

LSEG U.S. Weekly GFS Supply and Demand Forecasts

          
 

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year (2019-2023) Average For Month

U.S. Supply (bcfd)

          

U.S. Lower 48 Dry Production

97.3

96.8

96.9

101.3

95.0

U.S. Imports from Canada

6.9

7.0

6.7

7.6

7.8

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.0

Total U.S. Supply

104.2

103.8

103.6

108.9

102.8
           

U.S. Demand (bcfd)

          

U.S. Exports to Canada

2.7

2.1

2.1

1.9

2.4

U.S. Exports to Mexico

6.8

6.7

6.5

6.0

5.4

U.S. LNG Exports

10.7

11.9

12.4

14.4

10.1

U.S. Commercial

6.7

7.8

5.8

7.4

8.4

U.S. Residential

8.0

10.1

6.4

9.6

11.8

U.S. Power Plant

28.5

29.2

30.4

25.6

22.7

U.S. Industrial

22.5

23.3

22.3

21.5

25.9

U.S. Plant Fuel

4.8

4.8

4.8

4.9

5.0

U.S. Pipe Distribution

1.9

2.1

1.9

2.1

2.3

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

72.6

77.3

71.7

71.2

76.2

Total U.S. Demand

92.7

98.0

92.7

93.5

94.1
           
           
           
           

U.S. weekly power generation percent by fuel - EIA

          
 

Week ended Apr 26

Week ended Apr 19

Week ended Apr 12

Week ended Apr 5

Week ended Mar 29

Wind

13

18

16

15

16

Solar

6

7

6

5

5

Hydro

7

7

7

7

8

Other

1

2

1

1

1

Petroleum

0

0

0

0

0

Natural Gas

39

35

37

38

38

Coal

13

13

13

13

13

Nuclear

20

19

20

20

19
           

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

          

Hub

Current Day

Prior Day

      

Henry Hub <NG-W-HH-SNL>

1.59

1.64

      

Transco Z6 New York <NG-CG-NY-SNL>

1.49

1.47

      

PG&E Citygate <NG-CG-PGE-SNL>

2.34

2.22

      

Eastern Gas (old Dominion South) <NG-PCN-APP-SNL>

1.44

1.33

      

Chicago Citygate <NG-CG-CH-SNL>

1.49

1.45

      

Algonquin Citygate <NG-CG-BS-SNL>

1.67

1.60

      

SoCal Citygate <NG-SCL-CGT-SNL>

1.66

1.54

      

Waha Hub <NG-WAH-WTX-SNL>

1.37

1.21

      

AECO <NG-ASH-ALB-SNL>

1.11

1.19

      
           

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

          

Hub

Current Day

Prior Day

      

New England <EL-PK-NPMS-SNL>

27.50

27.00

      

PJM West <EL-PK-PJMW-SNL>

32.50

24.50

      

Ercot North <EL-PK-ERTN-SNL>

34.00

12.75

      

Mid C <EL-PK-MIDC-SNL>

37.50

44.00

      

Palo Verde <EL-PK-PLVD-SNL>

3.25

9.50

      

SP-15 <EL-PK-SP15-SNL>

-1.50

4.00

      

 

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