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US natgas prices drops 5% on mild weather view, record output

Credit: REUTERS/DADO RUVIC

Dec 4 (Reuters) - U.S. natural gas futures fell more than 5% on Monday on record output and forecasts for mild weather that should limit heating demand.

Front-month gas futures NGc1 for January delivery on the New York Mercantile Exchange traded 14.2 cents lower, or 5.1%, to $2.67 per million British thermal units at 11:00 a.m. EST (1600 GMT), after hitting a two-month low earlier in the session.

"If we don't see cold weather in December or January, the chance of prices getting to $3 is limited. For us to see higher prices, storage surplus have to come down, which comes with colder weather."

With U.S. natural gas production at record highs and ample amounts of fuel in storage, the futures market was sending signals that some traders have already given up hope of extreme price spikes this winter.

Analysts said the mild weather and record output should allow utilities to pull less gas than usual from storage than normal in coming weeks. They forecast U.S. gas stockpiles would end up about 7.2% over normal for this time of year in the week ended Dec. 1. EIA/GAS

Financial firm LSEG said average gas output in the Lower 48 U.S. states jumped to a record 108.4 billion cubic feet per day (bcfd) in November, up from the prior all-time high of 104.8 bcfd in October.

LSEG forecast that U.S. gas demand in the Lower 48, including exports, would drop from 129.9 bcfd last week to 122.6 bcfd this week before rising to 125.3 bcfd with the coming of seasonally cooler weather next week.

U.S. energy firms this week added oil and natural gas rigs for a third week in a row, energy services firm Baker Hughes BKR.O said in its closely followed report on Friday.

"On the supply side, new record production would appear to lie ahead as well efficiencies improve and the rig counts sustain a leveling trend following steady declines into last summer," said analysts at energy advisory Ritterbusch and Associates in a note.

The U.S. is on track to become the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due in part to supply disruptions and sanctions linked to the war in Ukraine.

Gas was trading around $13 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and $16.25 at the Japan Korea Marker (JKM) in Asia JKMc1. NG/EU

Week ended Dec 1 Forecast

Week ended Nov 24 Actual

Year ago Dec 1

Five-year average

Dec 1

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

-101

+10

-30

-48

U.S. total natgas in storage (bcf):

3,735

3,836

3,465

3,485

U.S. total storage versus 5-year average

7.2%

8.6%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2022

Five Year Average (2017-2021)

Henry Hub NGc1

2.74

2.78

5.77

6.54

2.89

Title Transfer Facility (TTF) TRNLTTFMc1

13.40

13.58

36.68

40.50

7.49

Japan Korea Marker (JKM) JKMc1

16.25

16.14

32.34

34.11

8.95

LSEG 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

330.4

312

371

369.6

384.8

U.S. GFS CDDs

3.2

5

10.3

5.4

4.7

U.S. GFS TDDs

333.6

317

381.3

375

388.5

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year (2018-2022) Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

109

108.5

108.6

101.5

94.2

U.S. Imports from Canada

8.6

8.8

9.0

9.3

9.1

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.2

Total U.S. Supply

117.5

117.3

117.7

110.8

103.5

U.S. Demand (bcfd)

U.S. Exports to Canada

2.5

3.2

3.2

3.4

3.2

U.S. Exports to Mexico

4.8

4.5

5.5

6.0

5.0

U.S. LNG Exports

14.1

14.4

14.1

12.0

8.6

U.S. Commercial

15.5

13.3

14.1

13.9

14.6

U.S. Residential

25.5

21.0

22.8

22.7

24.7

U.S. Power Plant

33.7

33.7

32.6

28.2

28.6

U.S. Industrial

25.3

24.4

24.7

24.4

25.0

U.S. Plant Fuel

5.4

5.4

5.4

5.3

5.3

U.S. Pipe Distribution

2.9

2.7

2.7

2.4

2.9

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

108.5

100.5

102.5

97.0

101.2

Total U.S. Demand

129.9

122.6

125.3

118.4

118.0

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam

Current Day % of Normal Forecast

Prior Day % of Normal Forecast

2023

% of Normal Actual

2022 % of Normal Actual

2021 % of Normal Actual

Apr-Sep

88

88

83

107

81

Jan-Jul

87

86

77

102

79

Oct-Sep

87

86

76

103

81

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

Week ended Dec 1

Week ended Nov 24

Week ended Nov 17

Week ended Nov 10

Week ended Nov 3

Wind

10

11

9

11

11

Solar

3

3

3

4

4

Hydro

6

6

6

5

5

Other

2

2

2

2

1

Petroleum

0

Natural Gas

42

39

42

41

40

Coal

17

16

17

16

19

Nuclear

20

22

21

20

19

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

Hub

Current Day

Prior Day

Henry Hub NG-W-HH-SNL

2.63

2.75

Transco Z6 New York NG-CG-NY-SNL

1.98

2.16

PG&E Citygate NG-CG-PGE-SNL

4.81

5.12

Eastern Gas (old Dominion South) NG-PCN-APP-SNL

1.89

2.06

Chicago Citygate NG-CG-CH-SNL

2.38

2.48

Algonquin Citygate NG-CG-BS-SNL

2.50

2.68

SoCal Citygate NG-SCL-CGT-SNL

4.6

5.50

Waha Hub NG-WAH-WTX-SNL

1.84

2.04

AECO NG-ASH-ALB-SNL

2.33

1.83

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

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

37.00

37.50

PJM West EL-PK-PJMW-SNL

33.75

38.50

Ercot North EL-PK-ERTN-SNL

29.75

28.00

Mid C EL-PK-MIDC-SNL

70.00

77.33

Palo Verde EL-PK-PLVD-SNL

57.50

44.25

SP-15 EL-PK-SP15-SNL

50.75

50.75

(Reporting by Anjana Anil and Ashitha Shivaprasad in Bengaluru Editing by Marguerita Choy)

((Anjana.Anil@thomsonreuters.com))

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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