Monday, October 25

US natgas futures rise on cooler weather, rising heating demand


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US natural gas futures climbed over 3% to a one-week high on Friday as some parts of

the country start to crank up their heaters with the coming of cooler weather and as near record global gas

prices keep demand strong for US liquefied natural gas (LNG) exports.

On their second to last day as the front-month, gas futures for October delivery rose 16.4 cents,

or 3.3%, to settle at $5.140 per million British thermal units (mmBtu), their highest close since Sept. 16.

November futures, which will soon be the front-month, were up 16 cents to $5.20 per mmBtu.

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For the week, the front-month rose less than 1%, putting the contract up for a fifth week in a row. During

that time the front-month gained about 30% on record global gas prices and the slow return of production after

Hurricane Ida hit Louisiana in late August.

Data provider Refinitiv said gas output in the US Lower 48 states fell to an average of 90.7 billion

cubic feet per day (bcfd) so far in September from 92.0 bcfd in August, due mostly to Hurricane Ida-related

losses along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019.

With the coming of cooler weather, Refinitiv projected average US gas demand, including exports, would

fall from 86.2 bcfd this week to 82.7 bcfd next week as air conditioning use declines before climbing to 84.4

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bcfd in two weeks as heating use rises. The forecast for next week was higher than Refinitiv expected on

Thursday.

With gas prices near record highs of around $24 per mmBtu in Europe and $27 in Asia

versus just about $5 in the United States, traders said buyers around the world would keep purchasing all the

LNG the United States could produce.

Despite reductions at several plants this month, the amount of gas flowing to US LNG export plants

slipped modestly to an average of 10.4 bcfd so far in September from 10.5 bcfd in August, data provider

Refinitiv said.

That small LNG feedgas decline came despite a three-week maintenance outage at Berkshire Hathaway Energy’s

Cove Point facility in Maryland, a brief shutdown at Freeport LNG’s plant in Texas during Tropical Storm

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Nicholas and a brief reduction this week at Cameron LNG’s plant in Louisiana.

One of the biggest reasons prices in Europe have soared in recent weeks has been growing concern that

there was too little gas in storage going into the winter heating season when demand for the fuel peaks.

Prices in the United States have remained much lower in part because the market expects the country to

have enough gas in inventory for the winter. Stockpiles were about 7% below normal for this time of year in

the United States versus over 20% below normal in some European countries.

But gas prices in some parts of the United States were still expected to soar this winter. Analysts expect

much higher prices in New England due to pipeline constraints and a reliance on what is now expensive LNG and

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in California where a severe drought, wildfires and lack of battery backup for intermittent renewable power

sources has boosted the use of gas-fired power plants.

Week ended Week ended Year ago Five-year

Sep 24 Sep 17 Sep 24 average

(Forecast) (Actual) Sep 24

US weekly natgas storage change (bcf): 82 76 74 72

US total natgas in storage (bcf): 3,164 3,082 3,745 3,383

US total storage versus 5-year average -6.5% -6.9%

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

Last Year Average Average

2020 (2016-2020)

Henry Hub 5.10 4.82 2.28 2.13 2.66

Title Transfer Facility (TTF) 23.93 23.82 3.94 3.24 5.19

Japan Korea Marker (JKM) 26.80 26.98 4.63 4.22 6.49

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

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Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

US GFS HDDs 29 30 56 52 70

US GFS CDDs 93 90 75 94 78

US GFS TDDs 122 120 131 146 148

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 90.9 91.8 91.3 87.2 82.6

US Imports from Canada 7.2 7.2 7.2 6.1 7.6

US LNG Imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 98.1 99.0 98.5 93.3 90.3

US Demand (bcfd)

US Exports to Canada 2.5 2.4 2.4 2.0 2.3

US Exports to Mexico 5.7 5.8 5.9 5.8 5.0

US LNG Exports 10.2 9.9 10.5 5.6 3.1

US Commercial 4.7 4.9 5.0 5.1 4.8

US Residential 3.8 4.1 4.2 4.5 3.8

US Power Plant 33.5 31.5 27.5 30.8 32.8

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US Industrial 20.9 21.0 20.9 21.6 21.1

US Plant Fuel 4.5 4.5 4.5 4.5 4.5 4.4

US Pipe Distribution 1.8 1.8 1.7 1.8 1.9

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 69.4 68.0 63.9 68.4 68.9

Total US Demand 87.8 86.2 82.7 81.8 79.3

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

Hub Current Day Prior Day

Henry Hub 4.94 4.92

Transco Z6 New York 4.28 4.23

PG&E Citygate 6.71 6.72

Dominion South 4.13 3.95

Chicago Citygate 4.65 4.60

Algonquin Citygate 4.44 4.34

SoCal Citygate 6.23 6.40

Waha Hub 4.68 4.62

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

Hub Current Day Prior Day

New England 68.75 66.50

PJM West 29.25 31.00

Ercot North 42.00 39.75

Mid C 63.37 63.00

Palo Verde 60.50 62.00

SP-15 60.50 61.50

(Reporting by Scott DiSavino; Editing by Mark Porter)

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