Sunday, September 19

US natgas futures jump 6% to 7-year high on rising demand forecast


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US natural gas futures jumped more

than 6% to a seven-year high on Monday on forecasts for higher

demand next week than previously expected, as air conditioning

use remains strong in most parts of the country and heating

demand starts to pick up in other areas.

Traders also noted US futures were climbing as record

global gas prices keep demand for US exports high at the same

time that more than half of US production in the Gulf of

Mexico remains shut-in two weeks after Hurricane Ida hit the

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Gulf Coast, and US gas inventories, like those in Europe,

remain lower than normal heading into the winter heating season,

when demand for the fuel peaks.

Further US supply disruptions from bad weather could also

be around the corner, with the US National Hurricane Center

projecting Tropical Storm Nicholas will scrape the South Texas

coast before making landfall near Corpus Christi Monday evening.

Front-month gas futures rose 30 cents, or 6.1%, to

$5.238 per million British thermal units (mmBtu) at 1:01 pm

EDT (1701 GMT), putting the contract on track for its highest

close since February 2014.

With the front-month up about 31% since late August when Ida

entered the Gulf of Mexico, gas speculators boosted their net

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long positions on the New York Mercantile and Intercontinental

Exchanges last week for a second week in a row for the first

time since early June, according to data from the Commodity

Futures Trading Commission (CFTC).

In addition to the front-month, futures for the rest of

2021, 2022 and 2023 were all rising, with calendar 2022

trading at a record high over $4 per mmBtu for a

third day in a row.

That is much higher than most analysts forecast for 2022.

After gas collapsed to a 25-year low in 2020, analysts forecast

gas prices in 2021 would average $3.23 per mmBtu before slipping

to $3.17 in 2022.

Data provider Refinitiv said gas output in the US Lower 48

states fell to an average of 90.1 billion cubic feet per day

(bcfd) so far in September, from 92.0 bcfd in August, due mostly

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to Ida-related losses along the Gulf Coast. That compares with a

monthly record of 95.4 bcfd in November 2019.

About 1.2 bcfd, or 54%, of gas production in the Gulf of

Mexico remains shut-in since Ida, according to government data.

US power company Entergy Corp, meanwhile,

said about 100,000 of its Louisiana customers were still without

service, down from a peak of 902,000 who lost power due to Ida.

Refinitiv projected average US gas demand, including

exports, would rise from 87.2 bcfd this week to 87.5 bcfd next

week. Next week’s forecast was higher than Refinitiv expected on

Friday.

The amount of gas flowing to US liquefied natural gas

(LNG) export plants has risen to an average of 10.9 bcfd so far

in September, from 10.5 bcfd in August, as buyers around the

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world keep purchasing all the super-chilled gas the United

States can produce. That compares with a monthly record of 11.5

bcfd in April.

Gas in Europe and Asia was trading

around $21 and $19 per mmBtu, respectively, compared with just

$5 for the US fuel. Gas at the Title Transfer Facility (TTF)

in the Netherlands, the European benchmark, was at a record

high.

Week ended Week ended Year ago Five-year

Sep 10 Sep 3 Sep 10 average

(Forecast) (Actual) Sep 10

US weekly natgas storage change (bcf): 67 52 86 79

US total natgas in storage (bcf): 2,990 2,923 3,601 3,237

US total storage versus 5-year average -7.6% -7.4%

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

Last Year Average Average

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2020 (2016-2020)

Henry Hub 5.02 5.01 2.28 2.13 2.66

Title Transfer Facility (TTF) 20.87 19.91 3.94 3.24 5.19

Japan Korea Marker (JKM) 18.65 18.63 4.63 4.22 6.49

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 22 17 29 36 40

US GFS CDDs 140 149 97 113 108

US GFS TDDs 162 166 126 149 148

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 89.9 90.9 91.2 88.3 82.6

US Imports from Canada 7.0 7.1 7.1 6.2 7.6

US LNG Imports 0.0 0.0 0.0 0.1 0.1

Total US Supply 97.0 98.0 98.3 96.6 90.3

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US Demand (bcfd)

US Exports to Canada 2.6 2.5 2.6 2.4 2.3

US Exports to Mexico 5.7 5.8 6.0 5.9 5.0

US LNG Exports 11.0 11.2 10.8 7.5 3.1

US Commercial 4.6 4.7 4.8 5.0 4.8

US Residential 3.7 3.8 4.1 4.3 3.8

US Power Plant 32.3 31.9 31.8 33.5 32.8

US Industrial 20.9 20.9 20.9 21.6 21.1

US Plant Fuel 4.4 4.5 4.5 4.5 4.4

US Pipe Distribution 1.8 1.8 1.8 1.8 1.9

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 67.8 67.6 68.1 70.8 68.9

Total US Demand 87.1 87.2 87.5 86.6 79.3

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

Hub Current Day Prior Day

Henry Hub 5.13 4.97

Transco Z6 New York 4.36 4.17

PG&E Citygate 6.66 6.57

Dominion South 4.16 4.07

Chicago Citygate 4.78 4.76

Algonquin Citygate 4.45 4.20

SoCal Citygate 7.54 10.96

Waha Hub 4.57 4.63

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

Hub Current Day Prior Day

New England 39.25 43.25

PJM West 36.25 42.00

Ercot North 45.00 49.00

Mid C 82.88 85.00

Palo Verde 94.50 118.75

SP-15 82.00 97.00

(Reporting by Scott DiSavino

Editing by Paul Simao and Steve Orlofsky)

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In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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