U.S. natgas futures hit 30-month high on rising air conditioning use

Credit: REUTERS/ANGUS MORDANT

U.S. natural gas futures jumped almost 3% to a 30-month high on Monday on soaring global gas prices and forecasts for more air conditioning demand next week than previously expected.

Adds closing prices

July 19 (Reuters) - U.S. natural gas futures jumped almost 3% to a 30-month high on Monday on soaring global gas prices and forecasts for more air conditioning demand next week than previously expected.

The U.S. price increase occurred despite a 5% drop in crude futures and forecasts for a little less hot weather and lower air conditioning demand this week than previously expected. Gas futures often follow big moves in oil prices, but not on Monday. O/R

Front-month gas futures NGc1 rose 10.5 cents, or 2.9%, to settle at $3.779 per million British thermal units (mmBtu), their highest close since December 2018.

Speculators, meanwhile, cut their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges last week for the first time in seven weeks as buyers cashed in some of their gains after front-month futures rose over 15% during the prior three weeks.

Data provider Refinitiv said U.S. output in the Lower 48 states slipped to 91.5 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia earlier in the month. That compares with an average of 92.2 bcfd in June and an all-time high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would rise from 92.3 bcfd this week to 94.7 bcfd next week as the weather turns seasonally hotter. The forecast for next week was higher than Refinitiv predicted on Friday.

The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants averaged 10.9 bcfd so far in July, up from 10.1 bcfd in June but still below the record 11.5 bcfd in April.

With European TRNLTTFMc1 and Asian JKMc1 gas trading near $13 and $14 per mmBtu, respectively, analysts said buyers around the world would keep purchasing all the LNG the United States can produce.

U.S. pipeline exports to Mexico, meanwhile, averaged 6.5 bcfd so far in July, down from a record 6.8 bcfd in June.

Week ended Jul 16 (Forecast)

Week ended Jul 9 (Actual)

Year ago Jul 16

Five-year average Jul 16

U.S. weekly natgas storage change (bcf):

+47

+55

+38

+36

U.S. total storage versus 5-year average

-6.2%

-6.7%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2020

Five Year Average (2016-2020)

Henry Hub NGc1

3.73

3.60

1.76

2.13

2.66

Title Transfer Facility (TTF) TRNLTTFMc1

12.60

12.12

1.79

3.24

5.19

Japan Korea Marker (JKM) JKMc1

13.96

13.42

2.39

4.22

6.49

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

Two-Week Total Forecast

Current Day

Prior Day

Prior Year

10-Year Norm

30-Year Norm

U.S. GFS HDDs

2

3

2

3

3

U.S. GFS CDDs

210

213

228

211

205

U.S. GFS TDDs

212

216

230

214

208

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

91.8

91.8

91.8

89.4

81.1

U.S. Imports from Canada

7.1

6.9

7.0

7.4

8.2

U.S. LNG Imports

0.0

0.0

0.0

0.1

0.2

Total U.S. Supply

98.9

98.7

98.8

96.9

89.5

U.S. Demand (bcfd)

U.S. Exports to Canada

2.3

2.4

2.3

2.4

2.2

U.S. Exports to Mexico

6.6

6.4

6.6

5.8

4.7

U.S. LNG Exports

10.8

10.6

10.9

3.6

2.7

U.S. Commercial

4.3

4.4

4.4

4.4

4.4

U.S. Residential

3.5

3.5

3.6

3.5

3.5

U.S. Power Plant

36.5

37.6

39.5

44.8

39.2

U.S. Industrial

20.7

20.7

20.8

21.4

20.6

U.S. Plant Fuel

4.5

4.5

4.5

4.5

4.5

U.S. Pipe Distribution

1.9

1.9

2.0

1.9

2.0

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

71.6

72.8

74.9

80.6

74.3

Total U.S. Demand

91.4

92.3

94.7

92.4

83.9

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

Hub

Current Day

Prior Day

Henry Hub NG-W-HH-SNL

3.70

3.68

Transco Z6 New York NG-CG-NY-SNL

3.55

3.67

PG&E Citygate NG-CG-PGE-SNL

5.06

5.01

Dominion South NG-PCN-APP-SNL

2.95

3.07

Chicago Citygate NG-CG-CH-SNL

3.46

3.47

Algonquin Citygate NG-CG-BS-SNL

3.30

3.70

SoCal Citygate NG-SCL-CGT-SNL

6.31

6.44

Waha Hub NG-WAH-WTX-SNL

3.40

3.36

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

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

40.50

57.50

PJM West EL-PK-PJMW-SNL

29.75

33.25

Ercot North EL-PK-ERTN-SNL

90.00

39.25

Mid C EL-PK-MIDC-SNL

78.50

44.60

Palo Verde EL-PK-PLVD-SNL

93.60

58.25

SP-15 EL-PK-SP15-SNL

77.75

59.00

(Reporting by Scott DiSavino Editing by Paul Simao and Jonathan Oatis)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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