Monday, December 5

US natgas up 2% on smaller-than-expected storage build, cold weather


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US natural gas futures gained about 2% on Thursday on a smaller-than-expected

storage build and forecasts for heating demand to rise next week when the weather turns much colder.

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Traders also noted prices were up on a possible increase in liquefied natural gas (LNG) exports if the

Freeport LNG plant in Texas starts to return to service.

The US Energy Information Administration (EIA) said utilities added 79 billion cubic feet (bcf) of gas

to storage during the week ended Nov. 4.

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That was smaller than the 84-bcf build analysts forecast in a Reuters poll and compares with an increase

of 15 bcf in the same week last year and a five-year (2017-2021) average increase of 20 bcf.

Analysts said last week’s build was bigger than normal because mild weather last week kept demand for the

fuel for heating low. They also noted that big builds last week and expected this week could boost stockpiles

to near- or above-normal levels for the first time since January.

On Freeport, analysts said the market remained extremely focused on rumors the plant may not return in

November since it has not yet filed its return-to-service plan with federal regulators. Demand for gas will

rise once the Freeport plant returns.

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Freeport LNG, however, has said repeatedly that it still expects the 2.1 billion-cubic-feet-per-day (bcfd)

export plant to return to at least partial service in November following an unexpected shutdown on June 8

caused by a pipeline explosion.

Freeport LNG submitted a draft Root Cause Failure Analysis to the Department of Transportation’s Pipeline

and Hazardous Materials Safety Administration (PHMSA) on Nov. 1, according to sources familiar with the

filing. The next step is for Freeport to submit a request to resume service.

A couple of vessels were waiting to pick up LNG from Freeport, according to Refinitiv data. Prism

Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism Agility were expected

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to arrive in late November.

But one vessel, Prism Brilliance, which had been waiting outside the Freeport plant, is now headed toward

Corpus Christi where Cheniere Energy Inc has an LNG export plant, according to Refinitiv data.

Traders noted power outages from Hurricane Nicole in Florida, where about 210,000 homes and businesses

were without power Thursday morning, reduced the amount of gas electric generators have to burn. That

reduction in gas demand helped limit the futures price increase.

Front-month gas futures rose 13.7 cents, or 2.3%, to $6.002 per million British thermal units

(mmBtu) at 10:32 am EST (1532 GMT).

EXTREME VOLATILITY

Rapid price changes over the past couple of weeks – futures gained or lost more than 5% on eight of the

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past 10 days – boosted the contract’s 30-day implied volatility index to its highest level since

hitting a record high in October 2021 for a second day in a row. The market uses implied volatility to

estimate likely price changes in the future.

Gas futures are up about 62% so far this year as much higher global gas prices feed demand for US

exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.

Gas was trading at $34 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $28

at the Japan Korea Marker (JKM) in Asia.

Data provider Refinitiv said that average gas output in the US Lower 48 states has fallen to 98.6 bcfd

so far in November, down from a record 99.4 bcfd in October.

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With the coming of much colder weather, Refinitiv projected average US gas demand, including exports,

would jump from 98.3 bcfd this week to 120.4 bcfd next week. Those forecasts were lower than Refinitiv’s

outlook on Wednesday.

Week ended Week ended Year ago Five-year

Nov 4 Oct 28 Nov 4 average

(Actual) (Actual) Nov 4

US weekly natgas storage change (bcf): +79 +107 +15 +20

US total natgas in storage (bcf): 3,580 3,501 3,617 3,656

US total storage versus 5-year average -2.1% -3.7%

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 5.92 5.87 5.12 3.73 2.89

Title Transfer Facility (TTF) 32.32 34.03 27.71 16.04 7.49

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Japan Korea Marker (JKM) 27.73 27.88 32.98 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 351 336 236 264 282

US GFS CDDs 8 10 11 15 11

US GFS TDDs 359 346 247 279 293

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 99.1 98.7 99.0 95.7 89.6

US Imports from Canada 7.3 6.2 6.8 8.6 8.2

US LNG Imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 106.4 104.9 105.8 104.3 97.9

US Demand (bcfd)

US Exports to Canada 2.6 2.3 2.3 3.0 2.9

US Exports to Mexico 5.4 5.7 5.7 5.5 5.1

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US LNG Exports 11.9 11.5 11.9 11.2 6.4

US Commercial 7.9 8.5 13.9 11.1 11.5

US Residential 10.4 11.5 22.5 16.7 17.2

US Power Plant 29.6 29.1 31.2 26.3 26.0

US Industrial 22.6 22.6 25.1 22.4 24.0

US Plant Fuel 4.9 4.9 4.9 4.9 4.9

US Pipe Distribution 2.1 2.1 2.7 2.1 2.1

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US Consumption 77.6 78.8 100.5 83.6 85.8

Total US Demand 97.6 98.3 120.4 103.3 100.2

US weekly power generation percent by fuel – EIA

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

Nov 11 Nov 4 Oct 28 Oct 21 Oct 14

Wind 15 12 15 11 11

Solar 3 3 3 3 4

Hydro 6 5 5 5 5

Other 3 2 2 3 3

Petroleum 0 0 0 0 0

Natural Gas 39 39 37 39 41

Coal 16 18 18 19 18

Nuclear 20 20 19 19 19

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

Hub Current Day Prior Day

Henry Hub 3.46 4.00

Transco Z6 New York 2.22 3.18

PG&E Citygate 8.17 8.36

Dominion South 1.91 3.05

Chicago Citygate 3.46 3.46

Algonquin Citygate 2.37 3.46

SoCal Citygate 8.42 8.37

Waha Hub 2.65 3.21

AECO 3.96 3.96

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

Hub Current Day Prior Day

New England 47.25

PJM West 51.00

Ercot North 38.50

Mid C 100.00

Palo Verde 64.00

SP-15 69.75

(Reporting by Scott DiSavino; Editing by Paul Simao and Lisa Shumaker)

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