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U.S. natgas futures up 1% on forecasts for warmer weather


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U.S. natural gas futures edged up about 1% to a fresh one-week high on Tuesday on

forecasts for warmer weather over the next two weeks than previously expected.

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That small increase occurred even though output was still on track to reach a record monthly high and

forecasts for lower demand next week than previously expected.

It also coincided with the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in

Texas, which has left more gas in the United States for utilities to inject into stockpiles for next winter.

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Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day

(bcfd) of gas before it shut on June 8. Freeport LNG expects the facility to return to at least partial

service in early to mid-November.

Front-month gas futures were up 6.8 cents, or 0.8%, to $8.317 per million British thermal units

(mmBtu) at 8:37 a.m. EDT (1237 GMT), putting the contract on track for its highest close since Sept. 2 for a

second day in a row.

That put the contract on track to rise for a fourth day in a row for the first time since May.

So far this year, gas futures are up about 123% as higher prices in Europe and Asia keep demand for U.S.

LNG exports strong. Global gas prices have soared due to supply disruptions and sanctions linked to Russia’s

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Feb. 24 invasion of Ukraine.

Gas was trading around $57 per mmBtu in Europe and $53 in Asia.

Russian gas exports via the three main lines into Germany – Nord Stream 1 (Russia-Germany), Yamal

(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – have averaged

just 1.4 bcfd so far in September, down from 2.5 bcfd in August and 10.8 bcfd in September 2021.

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U.S. gas futures lag far behind global prices because the United States is the world’s top producer with

all the fuel it needs for domestic use, while capacity constraints and the Freeport outage prevents the

country from exporting more LNG.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states have risen to 93.1 bcfd so far

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in September from a record 98.0 bcfd in August.

With the coming of cooler autumn weather, Refinitiv projected average U.S. gas demand, including exports,

would slip from 93.1 bcfd this week to 92.7 bcfd next week. The forecast for next week was lower than

Refinitiv’s outlook on Monday.

The average amount of gas flowing to U.S. LNG export plants has risen to 11.2 bcfd so far in September

from 11.0 bcfd in August. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export

plants can turn about 13.8 bcfd of gas into LNG.

The reduction in exports from Freeport is a problem for Europe, where most U.S. LNG has gone this year as

countries there wean themselves off Russian energy.

Russia, the world’s second-biggest gas producer, has provided about a third of Europe’s gas in recent

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years, totaling about 18.3 bcfd in 2021. The European Union wants to cut Russian gas imports by two-thirds by

the end of 2022 and refill stockpiles to 80% of capacity by Nov. 1 and 90% by Nov. 1 each year beginning in

2023.

Gas stockpiles in northwest Europe – Belgium, France, Germany and the Netherlands – were

currently about 4% above their five-year (2017-2021) average for this time of year, according to Refinitiv.

Storage was currently around 86% of capacity.

That is much healthier than U.S. gas inventories, which were still about 12% below their five-year norm.

Week ended Week ended Year ago Five-year

Sep 9 Sep 2 Sep 9 average

(Forecast) (Actual) Sep 9

U.S. weekly natgas storage change (bcf): +64 +54 +78 +82

U.S. total natgas in storage (bcf): 2,758 2,694 2,994 3,125

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U.S. total storage versus 5-year average -11.7% -11.5%

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 8.38 8.25 5.11 3.73 2.89

Title Transfer Facility (TTF) 56.25 56.49 22.61 16.04 7.49

Japan Korea Marker (JKM) 53.13 53.90 23.35 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

U.S. GFS HDDs 16 15 16 30 40

U.S. GFS CDDs 140 122 121 124 108

U.S. GFS TDDs 156 137 137 154 148

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

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U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 99.3 98.9 99.4 93.0 87.0

U.S. Imports from Canada 7.7 7.9 7.9 8.2 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 107.1 106.7 107.3 101.2 95.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 2.5 2.4 2.6 2.4

U.S. Exports to Mexico 5.4 5.6 5.6 5.8 5.3

U.S. LNG Exports 11.3 11.1 10.5 9.8 4.9

U.S. Commercial 4.5 4.7 4.8 4.7 4.9

U.S. Residential 3.6 3.8 4.0 3.8 3.9

U.S. Power Plant 41.7 37.1 37.1 34.4 33.2

U.S. Industrial 21.4 21.3 21.3 20.7 21.2

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 2.1 2.0 2.0 2.0 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 78.4 73.9 74.2 70.6 70.3

Total U.S. Demand 97.2 93.1 92.7 88.8 82.9

U.S. weekly power generation percent by fuel – EIA

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Week ended Week ended Week ended Week ended Week ended

Sep 16 Sep 9 Sep 2 Aug 26 Aug 19

Wind 6 6 7 5 6

Solar 3 3 3 3 3

Hydro 5 6 5 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 43 45 44 44 42

Coal 21 21 21 22 22

Nuclear 19 18 17 18 19

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 8.20 8.31

Transco Z6 New York 7.54 7.02

PG&E Citygate 9.60 8.82

Dominion South 7.19 7.10

Chicago Citygate 7.59 7.34

Algonquin Citygate 7.60 7.60

SoCal Citygate 8.82 7.86

Waha Hub 7.31 7.35

AECO 3.55 2.78

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 88.50 73.00

PJM West 112.75 99.50

Ercot North 79.00 77.75

Mid C 101.50 107.00

Palo Verde 81.75 91.25

SP-15 83.00 93.75

(Reporting by Scott DiSavino; Editing by Paul Simao)

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