U.S. natgas futures rise to new 31-month high on hot forecasts

Credit: REUTERS/ANGUS MORDANT

U.S. natural gas futures rose to a fresh 31-month high on Friday on forecasts for hotter weather and higher air conditioning demand over the next two weeks than previously expected.

Adds latest prices, quote

July 23 (Reuters) - U.S. natural gas futures rose to a fresh 31-month high on Friday on forecasts for hotter weather and higher air conditioning demand over the next two weeks than previously expected.

Front-month gas futures NGc1 rose 5.7 cents, or 1.4%, to settle at $4.060 per million British thermal units (mmBtu), their highest close since December 2018 for a fifth day in a row.

That put the front-month up almost 11% for the week after holding steady last week, its biggest weekly percentage gain since February.

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 92.5 bcfd this week to 95.5 bcfd next week and 95.6 bcfd in two weeks as the weather turns hotter than normal. Those forecasts were slightly higher than Refinitiv predicted on Thursday on expectations power generators will burn more gas to meet rising air conditioning demand.

"Gas demand from the power sector has largely outperformed this summer and continues to hold a larger than expected share of the generation mix. Recent coal retirements have reduced that fuel’s ability to cover the shortfall left by lagging renewables this summer, placing the onus on gas to answer the call," analysts at Gelber & Associates in Houston said in a note.

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 6.6 bcfd so far in July, down from a record 6.7 bcfd in June.

Week ended Jul 23 (Forecast)

Week ended Jul 16 (Actual)

Year ago Jul 23

Five-year average Jul 23

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

+41

+49

+27

+28

U.S. total storage versus 5-year average

-5.7%

-6.2%

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

4.02

3.95

1.76

2.13

2.66

Title Transfer Facility (TTF) TRNLTTFMc1

12.19

12.49

1.79

3.24

5.19

Japan Korea Marker (JKM) JKMc1

14.28

14.31

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

2

2

3

3

U.S. GFS CDDs

247

235

228

211

204

U.S. GFS TDDs

249

237

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

91.8

91.6

89.4

81.1

U.S. Imports from Canada

7.1

6.8

6.9

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

98.5

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

6.6

6.6

5.8

4.7

U.S. LNG Exports

10.8

10.5

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

3.5

3.5

3.5

U.S. Power Plant

36.5

37.9

40.3

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

73.1

75.7

80.6

74.3

Total U.S. Demand

91.4

92.5

95.5

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

4.02

3.94

Transco Z6 New York NG-CG-NY-SNL

3.14

3.27

PG&E Citygate NG-CG-PGE-SNL

5.42

5.38

Dominion South NG-PCN-APP-SNL

2.98

3.05

Chicago Citygate NG-CG-CH-SNL

3.74

3.75

Algonquin Citygate NG-CG-BS-SNL

3.11

3.27

SoCal Citygate NG-SCL-CGT-SNL

7.30

7.47

Waha Hub NG-WAH-WTX-SNL

3.63

3.63

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

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

39.25

32.25

PJM West EL-PK-PJMW-SNL

36.25

35.75

Ercot North EL-PK-ERTN-SNL

38.00

39.00

Mid C EL-PK-MIDC-SNL

67.50

90.67

Palo Verde EL-PK-PLVD-SNL

71.75

85.25

SP-15 EL-PK-SP15-SNL

72.00

84.75

(Reporting by Scott DiSavino; editing by David Evans and Grant McCool)

((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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