US natgas futures ease on mild weather, rising output

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US natural gas futures eased on Monday on rising output and forecasts for milder

weather and lower heating demand next week than previously expected.

Meteorologists forecast weather in the United States would remain milder than normal through at least

early April, which should keep heating demand low and allow utilities to start injecting gas into storage this

week – about a week earlier than usual.

That US price decline came even as global demand for gas to replace Russian fuel after its invasion of

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Ukraine keeps US liquefied natural gas (LNG) exports near record highs and European gas prices

about seven times over US futures.

Russia is the world’s second-biggest gas producer after the United States.

US front-month gas futures on the New York Mercantile Exchange (NYMEX) fell 6.1 cents, or 1.3%,

to $4.802 per million British thermal units (mmBtu) at 9:08 am EDT (1308 GMT).

With the winter heating season coming to an end, US gas speculators cut their net long futures last week

and options positions on the NYMEX and Intercontinental Exchanges for a sixth week in a row to their lowest

since June 2020, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.

That demand decline cut interest in trading gas, causing total US gas futures volume on the

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NYMEX to drop to 183,230 contracts on March 18, the lowest since December 2015. That compares with a daily

average of 378,160 contracts traded over the past year.

US gas futures remain shielded from global prices because the United States has all the fuel it needs

for domestic use, and the country’s ability to export more LNG is constrained by limited capacity.

The United States is already producing LNG near full capacity. So, no matter how high global gas prices

rise, it will not be able to export much more of the supercooled fuel.

Before Russia’s Feb. 24 invasion of Ukraine, the United States worked with other countries to ensure gas

supplies, mostly from LNG, would keep flowing to Europe. Russia usually provides around 30% to 40% of Europe’s

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gas, which totaled about 18.3 billion cubic feet per day (bcfd) in 2021.

Data provider Refinitiv said average gas output in the US Lower 48 states was on track to rise to 93.2

bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in

the year. That compares with a monthly record of 96.2 bcfd in December.

With the coming of slightly cooler weather next week, Refinitiv projected average US gas demand,

including exports, would rise from 96.7 bcfd this week to 97.6 bcfd next week. The forecast for next week,

however, was lower than Refinitiv’s outlook on Friday.

The amount of gas flowing to US LNG export plants rose to 12.82 bcfd so far in March from 12.43 bcfd in

February and a record 12.44 bcfd in January. The United States has the capacity to turn about 12.7 bcfd of gas

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into LNG. The rest of the gas flowing to the plants is used to operate the facilities.

On a daily basis, LNG feedgas hit a record 13.8 bcfd on Saturday, topping the prior record of 13.4 bcfd on

March 12.

Week ended Week ended Year ago Five-year

Mar 18 Mar 11 Mar 18 average

(Forecast) (Actual) Mar 18

US weekly natgas storage change (bcf): -54 -79 -29 -62

US total natgas in storage (bcf): 1,386 1,440 1,755 1,682

US total storage versus 5-year average -17.6% -17.4%

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

Last Year Average Average

2021 (2017-2021)

Henry Hub 4.89 4.86 2.62 3.73 2.89

Title Transfer Facility (TTF) 32.33 32.76 6.11 16.04 7.49

Japan Korea Marker (JKM) 35.50 35.56 6.39 18.00 8.95

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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 200 205 198 234 236

US GFS CDDs 21 18 15 22 18

US GFS TDDs 221 223 213 256 254

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 92.6 93.7 93.8 91.0 84.7

US Imports from Canada 8.4 8.2 8.6 8.2 8.5

US LNG Imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 100.9 101.8 102.4 99.2 93.3

US Demand (bcfd)

US Exports to Canada 3.4 3.6 3.5 3.2 2.8

US Exports to Mexico 5.6 5.7 5.7 6.1 4.9

US LNG Exports 12.9 13.3 12.8 11.6 5.4

US Commercial 12.8 9.5 10.1 9.2 12.3

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US Residential 19.8 13.3 14.5 13.1 19.5

US Power Plant 24.3 22.0 21.7 23.3 25.0

US Industrial 23.8 22.6 22.6 22.8 23.2

US Plant Fuel 4.6 4.6 4.6 4.6 4.6

US Pipe Distribution 2.3 2.0 2.0 2.3 2.7

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 87.7 74.2 75.6 75.4 87.4

Total US Demand 109.5 96.7 97.6 96.3 100.5

US weekly power generation percent by fuel – EIA

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

Mar 25 Mar 18 Mar 11 Mar 4 Feb 25

Wind 11 15 13 10 12

Solar 3 3 3 3 3

Hydro 8 8 8 7 7

Other 2 2 2 2 2

Petroleum 0 0 0 1 1

Natural Gas 33 31 33 34 33

Coal 20 20 21 22 22

Nuclear 22 20 20 21 20

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

Hub Current Day Prior Day

Henry Hub 4.87 4.80

Transco Z6 New York 3.83 3.80

PG&E Citygate 5.26 5.11

Dominion South 3.84 3.82

Chicago Citygate 4.57 4.46

Algonquin Citygate 4.02 4.00

SoCal Citygate 4.30 4.31

Waha Hub 3.42 3.37

AECO 3.75 3.80

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

Hub Current Day

New England 46.25 41.25

PJM West 31.50 33.75

Ercot North 31.00 44.25

Mid C 38.75 35.00

Palo Verde 39.50 38.25

SP-15 40.25 40.00

(Reporting by Scott DiSavino; editing by Barbara Lewis)