Monday, August 15

US natgas futures ease 1% on record output, milder forecasts


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US natural gas futures eased about 1% on Friday as output neared record highs and

forecasts for hot weather were revised slightly lower, which would mean lower demand for air conditioning.

Also weighing on prices was the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in

Texas, which has left more gas in the United States for utilities to inject into stockpiles for next winter.

Forecasts called for weather to remain hotter than normal through at least mid August.

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Gas-fired generators have provided more than 40% of US power in recent weeks, according to federal energy

data. Even with gas futures soaring about 52% in July, gas remained an attractive option because coal prices

kept hitting record highs.

Freeport, the second-biggest LNG export plant in the United States, was consuming about 2 billion cubic

feet per day (bcfd) of gas before it shut on June 8. Freeport expects to return the facility to at least

partial service in early October.

Front-month gas futures fell 5.8 cents, or 0.7%, to settle at $8.064 per million British thermal

units (mmBtu).

For the week, the contract slid about 2% after easing about 1% last week.

So far this year, the front-month was up about 116%, as much higher prices in Europe and Asia fed strong

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demand for US LNG exports. Gas flows to Europe from Russia dropped following Moscow’s Feb. 24 invasion of

Ukraine.

Gas was trading around $58 per mmBtu in Europe and $45 in Asia.

The United States became the world’s top LNG exporter during the first half of 2022. But exports are

capped no matter how high global gas prices rise because US plants have been operating at full capacity.

Russian gas exports on the three main lines into Germany – Nord Stream 1 (Russia-Germany), Yamal

(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – held at 2.5

bcfd on Thursday, same as Wednesday but off the average of 2.8 bcfd in July and far lower than

10.4 bcfd in August 2021.

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Data provider Refinitiv said average gas output in the US Lower 48 states rose to 97.8 bcfd so far in

August from a record 96.7 bcfd in July.

With hotter weather expected, Refinitiv projected that average US gas demand including exports would

rise from 98.9 bcfd this week to 100.8 bcfd next week before sliding to 99.2 bcfd in two weeks as heat starts

to ease. Refinitiv’s forecasts for this week and next were lower than on Thursday.

The average amount of gas flowing to US LNG export plants rose to 11.0 bcfd so far in August from 10.9

bcfd in July. That compares with a monthly record of 12.9 bcfd in March. The seven big US export plants can

turn about 13.8 bcfd of gas into LNG.

The reduction in US exports from Freeport is a problem for Europe, where countries have been trying to

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wean themselves off Russian energy.

Gas stockpiles in Northwest Europe – Belgium, France, Germany and the Netherlands – were

about 5% below the five-year (2017-2021) average for this time of year, according to Refinitiv. Storage was

currently about 66% of capacity.

That is much healthier than US inventories, which were about 12% below their five-year norm.

Week ended Week ended Year ago Five-year

Aug 5 Jul 29 Aug 5 average

(Forecast) (Actual) Aug 5

US weekly natgas storage change (bcf): +36 +41 +44 +45

US total natgas in storage (bcf): 2,493 2,457 2,769 2,839

US total storage versus 5-year average -12.2% -12.1%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

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Last Year Average Average

2021 (2017-2021)

Henry Hub 7.96 8.12 4.03 3.73 2.89

Title Transfer Facility (TTF) 59.09 59.83 15.43 16.04 7.49

Japan Korea Marker (JKM) 44.61 45.95 16.36 18.00 8.95

Refinitiv 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

US GFS HDDs 2 2 1 3 4

US GFS CDDs 248 254 209 205 194

US GFS TDDs 250 256 210 208 198

Refinitiv US Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

US Supply (bcfd)

US Lower 48 Dry Production 96.8 98.0 97.9 93.7 86.5

US Imports from Canada 8.2 8.1 7.9 7.9 8.0

US LNG Imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 104.9 106.1 105.8 101.6 94.6

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US Demand (bcfd)

US Exports to Canada 2.5 2.6 2.5 2.2 2.5

US Exports to Mexico 6.0 5.2 5.7 6.4 5.4

US LNG Exports 10.7 10.9 10.8 10.5 4.4

US Commercial 4.4 4.4 4.4 4.4 4.5

US Residential 3.6 3.5 3.6 3.5 3.4

US Power Plant 43.9 44.0 45.4 37.0 38.8

US Industrial 21.3 21.4 21.4 20.9 21.2

US Plant Fuel 4.8 4.8 4.8 4.8 4.8

US Pipe Distribution 2.1 2.1 2.2 2.1 2.1

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 80.1 80.3 81.9 72.8 74.9

Total US Demand 99.3 98.9 100.8 91.9 87.2

US weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended Week ended Week ended

Aug 5 Jul 29 Jul 22 Jul 15 Jul 8

Wind 8 7 8 6 8

Solar 3 3 3 3 4

Hydro 5 5 6 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 42 42 45 44 42

Coal 22 22 22 21 21

Nuclear 17 17 17 17 17

SNL US Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 8.40 7.81

Transco Z6 New York 7.87 8.15

PG&E Citygate 9.21 8.75

Dominion South 7.52 7.15

Chicago Citygate 7.85 7.51

Algonquin Citygate 8.35 8.45

SoCal Citygate 9.89 9.40

Waha Hub 7.26 6.80

AECO 3.63 4.96

SNL US Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day

New England 164.25 182.75

PJM West 114.50 150.75

Ercot North 122.50 177.75

Mid C 102.83 63.00

Palo Verde 101.25 108.50

SP-15 102.75 102.75

(Reporting by Scott DiSavino; Editing by Mark Porter and David Gregorio)

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