EQT

US natgas prices ease 1% to three-week low on mild forecasts

Credit: REUTERS/ANGUS MORDANT

By Scott DiSavino

March 22 (Reuters) - U.S. natural gas futures eased about 1% to a three-week low on Thursday on forecasts for milder weather over the next two weeks than previously expected, ample gas in storage and expectations gas flows to liquefied natural gas (LNG) export plants would remain low through May due to outages at Freeport LNG's plant in Texas.

Freeport LNG said it anticipates two of the three liquefaction trains at its export plant will remain out of service for testing and repairs through May.

Front-month gas futures NGc1 for April delivery on the New York Mercantile Exchange fell 1.7 cents, or 1.0%, to $1.666 per million British thermal units (mmBtu) at 9:05 a.m EDT (1305 GMT), putting the contract on track for its lowest close since Feb. 27.

For the week, however, the contract was still up about 1% after falling about 8% last week. Energy traders said futures prices gained support earlier in the week from a continued drop in U.S. output after gas prices collapsed to a 3-1/2-year low in February.

Prices fell as low as $1.511 per mmBtu on Feb. 27, their lowest since June 2020, as near-record output, mostly mild weather and low heating demand this winter allowed utilities to leave significantly more gas in storage than usual for this time of year.

Analysts estimated current gas stockpiles were around 41% above normal levels. EIA/GASNGAS/POLL

Those low prices were expected to boost U.S. gas use to a record high in 2024, but cut production for the first time since 2020 when the COVID-19 pandemic destroyed demand for the fuel, according to the U.S. Energy Information Administration's (EIA) latest outlook.

Output was already down by around 4% over the past month as several energy firms, including EQTEQT.N and Chesapeake EnergyCHK.O, delay well completions and cut back on other drilling activities.

EQT is currently the biggest U.S. gas producer and Chesapeake will soon become the biggest producer after its merger with Southwestern EnergySWN.N.

In the spot market, mild weather and ample hydropower supplies in the West cut prices for next-day gas at the Southern California Border hub NG-SCL-CGT-SNL to $1.39 per mmBtu, their lowest since July 2020.

SUPPLY AND DEMAND

Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 100.2 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record high of 105.5 bcfd in December 2023.

Meteorologists projected weather across the Lower 48 would turn from mostly colder than normal from now through March 28 before turning seasonally normal from March 29-April 6.

LSEG forecast gas demand in the Lower 48, including exports, would rise from 113.4 bcfd this week to 114.1 bcfd with the weather turning cooler next week before falling to 108.0 bcfd in two weeks as the weather turns mild. The forecasts for this week and next were higher than LSEG's outlook on Thursday.

Gas flows to the seven big U.S. LNG export plants fell to an average of 13.2 bcfd so far in March, down from 13.7 bcfd in February. That compares with a monthly record of 14.7 bcfd in December.

Analysts do not expect U.S. LNG feedgas to return to record levels until all three liquefaction trains at Freeport return to full service. Freeport has said Trains 1 and 2 will likely remain down until May for inspections and repairs, while Train 3 was operating. Each liquefaction train at Freeport can turn about 0.7 bcfd of gas into LNG.

Week ended Mar 22 Forecast

Week ended Mar 15 Actual

Year ago Mar 15

Five-year average

Mar 15

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

-33

+7

-55

-27

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

2,299

2,332

1,866

1,627

U.S. total storage versus 5-year average

41.3%

41.0%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2023

Five Year Average (2018-2022)

Henry Hub NGc1

1.69

1.68

2.41

2.66

3.60

Title Transfer Facility (TTF) TRNLTTFMc1

8.59

8.44

13.72

13.04

14.39

Japan Korea Marker (JKM) JKMc1

9.29

9.57

13.59

14.39

14.31

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

235

253

280

246

227

U.S. GFS CDDs

11

10

19

21

19

U.S. GFS TDDs

246

263

299

267

246

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year (2019-2023) Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

100.4

100.1

99.9

101.9

95.1

U.S. Imports from Canada

7.6

7.5

7.8

8.6

8.4

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.1

Total U.S. Supply

108.0

107.6

107.7

110.5

103.6

U.S. Demand (bcfd)

U.S. Exports to Canada

3.7

3.7

3.6

2.8

3.0

U.S. Exports to Mexico

6.5

6.0

6.3

5.2

5.4

U.S. LNG Exports

13.2

13.0

13.4

13.0

9.2

U.S. Commercial

10.4

11.5

11.6

13.1

12.3

U.S. Residential

15.2

16.9

17.5

20.6

19.4

U.S. Power Plant

29.1

30.5

30.0

29.0

23.8

U.S. Industrial

23.6

24.4

24.3

23.6

26.8

U.S. Plant Fuel

5.0

4.9

4.9

5.0

5.0

U.S. Pipe Distribution

2.3

2.4

2.4

2.3

2.3

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

85.8

90.7

90.9

93.7

89.7

Total U.S. Demand

109.1

113.4

114.1

114.7

107.3

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

84

83

83

107

81

Jan-Jul

85

83

77

102

79

Oct-Sep

85

84

76

103

81

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

Week ended Mar 22

Week ended Mar 15

Week ended Mar 8

Week ended Mar 1

Week ended Feb 23

Wind

14

15

15

14

13

Solar

5

5

4

4

4

Hydro

8

8

7

7

7

Other

1

1

1

1

1

Petroleum

Natural Gas

40

38

39

38

40

Coal

12

12

13

16

15

Nuclear

21

21

21

21

20

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

Hub

Current Day

Prior Day

Henry Hub NG-W-HH-SNL

1.55

1.58

Transco Z6 New York NG-CG-NY-SNL

1.46

1.65

PG&E Citygate NG-CG-PGE-SNL

2.27

2.30

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

1.40

1.50

Chicago Citygate NG-CG-CH-SNL

1.47

1.55

Algonquin Citygate NG-CG-BS-SNL

1.80

2.47

SoCal Citygate NG-SCL-CGT-SNL

1.39

1.50

Waha Hub NG-WAH-WTX-SNL

0.90

0.24

AECO NG-ASH-ALB-SNL

1.24

1.32

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

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

28.50

32.50

PJM West EL-PK-PJMW-SNL

32.00

35.75

Ercot North EL-PK-ERTN-SNL

25.00

40.00

Mid C EL-PK-MIDC-SNL

23.00

24.00

Palo Verde EL-PK-PLVD-SNL

14.50

1.00

SP-15 EL-PK-SP15-SNL

13.00

3.50

(Reporting by Scott DiSavino; Editing by Andrea Ricci)

((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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