US natgas rises 5% to near 9-week high on soaring global prices

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US natural gas futures rose about 5% to a near-nine week high on Wednesday as

worries about Russia’s plan to price energy exports in roubles caused global energy prices to spike, keeping

demand for US liquefied natural gas (LNG) exports near record highs.

That US gas price gain came despite forecasts for milder weather and lower demand than previously

expected, which should allow utilities to inject gas into storage next week.

Germany on Wednesday triggered an emergency plan to manage gas supplies in Europe’s largest economy in an

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unprecedented move that could see the government ration power if there is a disruption or halt in gas supplies

from Russia. That caused gas prices at the Title Transfer Facility (TTF) in the Netherlands, the

European benchmark, to jump about 18% to around $41 per million British thermal units (mmBtu) earlier in the

session.

European prices, however, pared gains – trading around $39 per mmBtu Wednesday afternoon – after Russia

said it will not immediately demand buyers pay for its gas exports in roubles, promising a gradual shift.

On their first day as the front month, gas futures for May delivery rose 27.5 cents, or 5.2%, to

settle at $5.605 per mmBtu, their highest close since Jan. 27.

The US gas market remains mostly shielded from higher global prices because the United States has all

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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 it will not be able to export much more

of the supercooled fuel regardless of how high global gas prices rise.

The United States, the world’s top gas producer, has agreed to divert some of its LNG exports to Europe to

help allies break their dependence on Russian gas after Russia invaded Ukraine on Feb. 24. Russia, the world’s

second-biggest gas producer, provided about 30-40% of Europe’s 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 rose to 93.3 bcfd so far in

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March, up from 92.5 bcfd in February, as more oil and gas wells return to service after freezing over the

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

Refinitiv projected average US gas demand, including exports, would drop from 105.3 bcfd this week to

95.8 bcfd next week as the weather turns milder. The forecast for next week was lower than Refinitiv’s outlook

on Tuesday.

The amount of gas flowing to US LNG export plants rose to 12.81 bcfd so far in March, up from 12.43 bcfd

in February and a monthly record of 12.44 bcfd in January. The United States can turn about 13.1 bcfd of gas

into LNG.

Traders said US LNG exports would remain near record levels provided that global gas prices remain well

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above US futures as utilities around the world scramble for cargoes to meet surging demand in Asia and

replenish low inventories in Europe, especially with the threat of Russia possibly cutting European supplies.

Week ended Week ended Year ago Five-year

Mar 25 Mar 18 Mar 25 average

(Forecast) (Actual) Mar 25

US weekly natgas storage change (bcf): +21 -51 +7 -23

US total natgas in storage (bcf): 1,410 1,389 1,762 1,659

US total storage versus 5-year average -15.0% -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 5.36 5.33 2.62 3.73 2.89

Title Transfer Facility (TTF) 39.26 34.44 6.11 16.04 7.49

Japan Korea Marker (JKM) 33.88 33.97 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 190 199 159 207 199

US GFS CDDs 28 29 28 25 23

US GFS TDDs 218 228 187 232 222

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 93.8 93.5 93.9 91.5 84.7

US Imports from Canada 8.1 8.9 8.6 7.4 8.5

US LNG Imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 101.9 102.4 102.5 98.9 93.3

US Demand (bcfd)

US Exports to Canada 3.5 3.4 3.4 3.0 2.8

US Exports to Mexico 5.6 5.4 5.6 5.9 4.9

US LNG Exports 13.0 12.8 12.0 11.8 5.4

US Commercial 9.8 11.8 9.4 8.8 12.3

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US Residential 13.9 17.6 13.3 13.1 19.5

US Power Plant 22.3 24.1 22.9 24.3 25.0

US Industrial 22.8 23.2 22.5 23.4 23.2

US Plant Fuel 4.6 4.6 4.6 4.6 4.6

US Pipe Distribution 2.0 2.2 2.0 2.0 2.7

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 75.5 83.7 74.8 76.3 87.4

Total US Demand 97.6 105.3 95.8 97.0 100.5

US weekly power generation percent by fuel – EIA

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

Apr 1 Mar 25 Mar 18 Mar 11 Mar 4

Wind 14 15 15 13 10

Solar 4 3 3 3 3

Hydro 8 8 8 8 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 1

Natural Gas 32 31 31 33 34

Coal 19 18 20 21 22

Nuclear 21 21 20 20 21

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

Hub Current Day Prior Day

Henry Hub 5.32 5.52

Transco Z6 New York 4.90 5.61

PG&E Citygate 5.96 6.11

Dominion South 4.67 5.12

Chicago Citygate 5.03 5.14

Algonquin Citygate 5.41 12.25

SoCal Citygate 4.90 5.03

Waha Hub 3.98 3.87

AECO 4.16 4.31

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

Hub Current Day

New England 89.00 116.50

PJM West 33.25 36.75

Ercot North 51.25 44.00

Mid C 24.50 35.50

Palo Verde 30.50 36.50

SP-15 36.00 40.75

(Reporting by Scott DiSavino

Editing by David Goodman, Kirsten Donovan and Will Dunham)