US natgas down 2% on lower flows to LNG export plants, mild weather

Jun 17, 2023

June 6 (Reuters) - U.S. natural gas futures fell about 2% on Tuesday on lower gas flows to liquefied natural gas (LNG) plants due to maintenance, forecasts for milder weather and less demand over the next two weeks than previously expected and a drop in global gas prices. That U.S. price decline came even as low amounts of wind power keeps forcing power generators to burn more gas to produce electricity, a drop in U.S. daily output, rising exports to Mexico and forecasts for hot weather in mid- to late June. The amount of U.S. power generated by wind so far this week dropped to just 5% of the total versus a recent high of 12% during the week ended May 12, according to federal energy data. That boosted the amount of power generated by gas this week to 43%, up from around 40% in recent weeks. When power generators burn more gas to produce electricity to meet rising air conditioning use, there is less of the fuel available to go into storage for the peak winter heating season. That helps boost prices. Front-month gas futures for July delivery on the New York Mercantile Exchange fell 4.3 cents, or 1.9%, to $2.202 per million British thermal units (mmBtu) at 8:57 a.m. EDT (1257 GMT). With growing interest in energy trading in recent weeks, open interest in NYMEX gas futures rose to 1.389 million contracts on Monday, the most since September 2021. Around the world, gas futures remained volatile. Prices at the Dutch Title Transfer Facility (TTF) benchmark in Europe dropped about 15% on Tuesday to around $8 per mmBtu after soaring 25% on Monday. So far this year, gas prices at TTF and the Japan Korea Marker (JKM) benchmark in Asia have collapsed by more than 65%. On Friday, gas at TTF was trading at a 25-month low of around $7 per mmBtu, while JKM held near a 24-month low near $9. SUPPLY AND DEMAND Data provider Refinitiv said average gas output in the U.S. Lower 48 states eased to 102.3 billion cubic feet per day (bcfd) so far in June, down from a monthly record of 102.5 bcfd in May. On a daily basis, however, output was on track to drop about 1.7 bcfd to a preliminary six-week low of 101.3 bcfd on Tuesday. That would be the biggest daily output drop since January, but analysts noted preliminary data is often revised later in the day. Meteorologists projected the weather in the Lower 48 states would remain mostly near normal through June 14 before turning hotter than normal from June 15-21. Even with warmer weather coming, Refinitiv forecast U.S. gas demand, including exports, would ease from 95.4 bcfd this week, when low wind power was seen forcing power generators to burn more gas, to 94.1 bcfd next week. Those demand forecasts were lower than Refinitiv's outlook on Monday. U.S. exports to Mexico rose to an average of 7.5 bcfd so far in June, up from 5.9 bcfd in May. That compares with a monthly record high of 6.7 bcfd in June 2021. Gas flows to the seven big U.S. LNG export plants fell to an average of 12.0 bcfd so far in June, down from 13.0 bcfd in May. That is well below the monthly record of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana. Record flows in April were higher than the 13.8 bcfd of gas the seven big plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG. Week ended Week ended Year ago Five-year Jun 2 May 26 Jun 2 average (Forecast) (Actual) Jun 2 U.S. weekly natgas storage change (bcf): 113 110 99 100 U.S. total natgas in storage (bcf): 2,559 2,446 1,988 2,197 U.S. total storage versus 5-year average 16.5% 16.6% Global Gas Benchmark Futures ($ per mmBtu) Current Prior Day This Month Prior Year Five Year Day Last Year Average Average 2022 (2018-2022) Henry Hub 2.22 2.25 7.60 6.54 3.60 Title Transfer Facility (TTF) 8.46 9.18 33.44 40.50 14.39 Japan Korea Marker (JKM) 9.27 9.29 29.72 34.11 14.31 Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days Two-Week Total Forecast Current Prior Day Prior Year 10-Year 30-Year Day Norm Norm U.S. GFS HDDs 11 11 16 24 18 U.S. GFS CDDs 153 154 170 148 144 U.S. GFS TDDs 164 165 186 172 162 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 103.0 102.5 102.8 97.5 89.8 U.S. Imports from Canada 6.8 6.9 6.8 8.7 7.9 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 109.8 109.4 109.6 106.2 97.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.5 2.3 2.3 2.5 2.3 U.S. Exports to Mexico 6.7 7.1 6.3 6.2 5.5 U.S. LNG Exports 13.3 11.9 12.6 12.0 6.0 U.S. Commercial 4.5 4.5 4.4 4.5 4.7 U.S. Residential 3.9 3.9 3.7 3.7 4.3 U.S. Power Plant 31.8 37.3 36.4 33.8 34.8 U.S. Industrial 21.1 21.2 21.2 20.7 21.1 U.S. Plant Fuel 5.1 5.1 5.1 5.1 5.1 U.S. Pipe Distribution 1.8 2.0 1.9 1.8 1.8 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 68.4 74.1 73.0 69.7 71.9 Total U.S. Demand 90.9 95.4 94.1 90.4 85.7 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jun 9 Jun 2 May 26 May 19 May 12 Wind 5 10 9 8 12 Solar 5 5 5 4 5 Hydro 7 8 9 9 9 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 43 40 40 42 40 Coal 17 15 15 15 14 Nuclear 20 20 20 19 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Prior Day Day Henry Hub 1.92 1.74 Transco Z6 New York 1.47 1.23 PG&E Citygate 3.48 2.51 Eastern Gas (old Dominion South) 1.41 1.29 Chicago Citygate 1.88 1.66 Algonquin Citygate 1.65 1.40 SoCal Citygate 2.79 2.00 Waha Hub 1.91 1.65 AECO 1.64 1.46 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Prior Day Day New England 27.25 25.00 PJM West 38.25 34.50 Ercot North 31.50 30.25 Mid C 84.67 59.38 Palo Verde 32.25 14.75 SP-15 34.50 16.25 (Reporting by Scott DiSavino; Editing by Andrea Ricci)

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