U.S. natgas futures hit 31-month high on hotter forecasts

Credit: REUTERS/ANGUS MORDANT

U.S. natural gas futures rose over 2% to a 31-month high on Wednesday on forecasts for hotter weather and higher air conditioning demand through early August.

Adds closing prices

July 21 (Reuters) - U.S. natural gas futures rose over 2% to a 31-month high on Wednesday on forecasts for hotter weather and higher air conditioning demand through early August.

That price increase came despite expectations high gas prices would cause power generators to burn more coal and less gas to produce electricity next week than previously expected.

Front-month gas futures NGc1 rose 8.3 cents, or 2.1%, to settle at $3.959 per million British thermal units (mmBtu) their highest close since December 2018 for a third day in a row.

Data provider Refinitiv said U.S. output in the Lower 48 states slipped to 91.4 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 93.8 bcfd next week as the weather turns seasonally hotter. The forecast for this week was higher than Refinitiv predicted on Tuesday due to the heat, while its outlook for next week was lower on expectations high gas prices will drive power generators to burn more coal to meet air conditioning demand.

The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants has averaged 10.8 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 $12 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, have averaged 6.5 bcfd so far in July, down from a record 6.7 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):

+44

+55

+38

+36

U.S. total storage versus 5-year average

-6.3%

-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

3.95

3.77

1.76

2.13

2.66

Title Transfer Facility (TTF) TRNLTTFMc1

12.31

11.96

1.79

3.24

5.19

Japan Korea Marker (JKM) JKMc1

14.04

14.19

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

3

3

2

3

3

U.S. GFS CDDs

230

228

228

211

204

U.S. GFS TDDs

233

231

230

214

207

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

91.6

92.0

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

98.6

99.0

96.9

89.5

U.S. Demand (bcfd)

U.S. Exports to Canada

2.3

2.3

2.3

2.4

2.2

U.S. Exports to Mexico

6.6

6.4

6.5

5.8

4.7

U.S. LNG Exports

10.8

10.3

10.1

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

38.0

39.4

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

73.2

74.8

80.6

74.3

Total U.S. Demand

91.4

92.3

93.8

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

3.82

3.75

Transco Z6 New York NG-CG-NY-SNL

3.30

3.46

PG&E Citygate NG-CG-PGE-SNL

5.30

5.25

Dominion South NG-PCN-APP-SNL

3.03

3.00

Chicago Citygate NG-CG-CH-SNL

3.68

3.61

Algonquin Citygate NG-CG-BS-SNL

3.36

3.70

SoCal Citygate NG-SCL-CGT-SNL

7.12

7.35

Waha Hub NG-WAH-WTX-SNL

3.53

3.37

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

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

40.25

51.25

PJM West EL-PK-PJMW-SNL

34.50

39.25

Ercot North EL-PK-ERTN-SNL

40.50

35.00

Mid C EL-PK-MIDC-SNL

42.50

79.71

Palo Verde EL-PK-PLVD-SNL

85.75

90.96

SP-15 EL-PK-SP15-SNL

86.00

81.25

(Reporting by Scott DiSavino; editing by Barbara Lewis and Cynthia Osterman)

((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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