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U.S. natgas jumps 10% on potential rail strike, higher demand forecast


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U.S. natural gas futures jumped about 10% to nearly a two-week high on Wednesday on

forecasts for higher demand over the next two weeks, soaring global gas prices and worries that a possible

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railroad strike could threaten coal supplies to power plants.

A rail strike could force generators to burn more gas to produce electricity. Coal fuels about 20% of U.S.

power generation. About two-thirds of the nation’s coal-fired power plants receive their coal by rail.

When coal or any other fuel is not available for power generation, energy firms burn more gas to produce

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power. Gas already provides about 37% of U.S. electricity.

U.S. Labor Secretary Marty Walsh hosted talks with freight railroad and union officials aimed at heading

off a rail shutdown that could begin as early as Friday.

Gas prices rose even though output was on track to reach a monthly record, an outage was expected at the

Cove Point liquefied natural gas (LNG) plant in Maryland in October, and an ongoing outage at the Freeport LNG

export plant in Texas is leaving more gas in the United States for utilities to inject into stockpiles for

next winter.

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

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service in early to mid-November.

Front-month gas futures rose 83 cents, or 10%, to settle at $9.114 per million British thermal

units (mmBtu), their highest close since Sept. 1.

That is the biggest one-day percentage gain since July 20 and the fifth straight day of gains for the

first time since May.

So far this year, gas futures are up about 145% 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

Feb. 24 invasion of Ukraine.

Gas was trading around $62 per mmBtu in Europe and $53 in Asia. That was a 8% jump

for European prices.

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

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(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 has risen to 99.1 bcfd so far

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,

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would slip from 93.9 bcfd this week to 93.7 bcfd next week. Those forecasts were higher than Refinitiv’s

outlook on Tuesday.

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.

Cove Point in Maryland usually shuts in October for a couple weeks of maintenance.

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): +73 +54 +78 +82

U.S. total natgas in storage (bcf): 2,767 2,694 2,994 3,125

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

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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 8.40 8.28 5.11 3.73 2.89

Title Transfer Facility (TTF) 61.83 56.83 22.61 16.04 7.49

Japan Korea Marker (JKM) 53.04 53.13 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 18 16 16 30 42

U.S. GFS CDDs 137 140 121 124 105

U.S. GFS TDDs 155 156 137 154 147

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 99.3 98.8 99.2 93.0 87.0

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U.S. Imports from Canada 7.7 7.8 7.9 8.2 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 107.1 106.6 107.1 101.2 95.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 2.4 2.5 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 11.4 11.0 9.8 4.9

U.S. Commercial 4.5 4.7 4.8 4.7 4.9

U.S. Residential 3.6 3.7 4.0 3.8 3.9

U.S. Power Plant 41.7 37.8 37.5 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 74.5 74.6 70.6 70.3

Total U.S. Demand 97.2 93.9 93.7 88.8 82.9

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

Week ended Week ended Week ended Week ended Week ended

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Sep 16 Sep 9 Sep 2 Aug 26 Aug 19

Wind 6 6 7 5 6

Solar 3 3 3 3 3

Hydro 6 6 5 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 44 45 44 44 42

Coal 20 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 8.49 8.20

Transco Z6 New York 7.78 7.54

PG&E Citygate 9.31 9.60

Dominion South 7.50 7.19

Chicago Citygate 7.74 7.59

Algonquin Citygate 7.84 7.60

SoCal Citygate 9.60 8.82

Waha Hub 7.54 7.31

AECO 3.50 3.55

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

Hub Current Day Prior Day

New England 71.00 88.50

PJM West 105.25 112.75

Ercot North 72.00 79.00

Mid C 99.50 101.50

Palo Verde 78.50 81.75

SP-15 81.00 83.00

(Reporting by Scott DiSavino; Editing by Bernadette Baum, Jonathan Oatis and Paul Simao)

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