U.S. natgas futures decline for 8th week on record output

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U.S. natural gas futures fell about 4% to a near three-month low on Friday as

record output and reduced liquefied natural gas (LNG) exports allowed utilities to inject much bigger than

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normal amounts of gas into storage for the winter over the past month.

That put the contract down for an eighth week in a row for the first time since February 2001.

Major LNG outages include Berkshire Hathaway Energy’s shutdown of its 0.8-billion-cubic-feet-per-day

(bcfd) Cove Point LNG export plant in Maryland for about three weeks of planned maintenance on Oct. 1 and the

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continuing shutdown of Freeport LNG’s 2.0-bcfd plant in Texas for unplanned work after an explosion on June 8.

Freeport expects the facility to return to at least partial service in early to mid-November.

There are at least three vessels heading to Freeport, according to Refinitiv data, including Prism

Brilliance (expected to arrive Oct. 18), Prism Diversity (Oct. 27) and Seapeak Methane (Nov. 22), prompting

some traders to believe Freeport will return in November. Others in the market, however, believe the plant’s

return will be delayed. Officials at Freeport said they remain on track to return the plant in November.

Front-month gas futures fell 28.8 cents, or 4.3%, to settle at $6.453 per million British thermal

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units (mmBtu), close to the three-month low of $6.435 settles on Oct. 10 and Oct. 12.

For the week, the contract was down about 4%, bringing its losses over eight weeks to around 35%.

Despite the weeks of declines, U.S. futures were up still about 74% so far this year as soaring global gas

prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s Feb. 24

invasion of Ukraine.

Gas was trading at $40 per mmBtu in Europe and $35 in Asia.

That puts European forwards down about 8% and on track for their lowest close since June 28 as strong LNG

imports have boosted the amount of gas in storage in countries in the northwest part of the continent to

healthy levels above 90% of capacity. European prices hit an all-time high of $90.91 on Aug. 25.

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Russian gas exports via the three main lines into Germany – Nord Stream 1 (Russia-Germany), Yamal

(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – have averaged

just 1.3 bcfd so far in October, the same as September but well below 9.2 bcfd seen in October 2021.

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U.S. gas futures lag far behind global prices because the United States is the world’s top producer with

all the fuel it needs for domestic use, while capacity constraints and the Freeport outage prevent the country

from exporting more LNG.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.9 bcfd so far in

October, up from a monthly record of 99.4 bcfd in September.

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Refinitiv projected average U.S. gas demand, including exports, would jump from 92.8 bcfd this week to

99.3 bcfd next week with the coming of colder weather before sliding to 97.2 bcfd in two weeks with the return

of milder temperatures. The forecasts for this week and next week were higher than Refinitiv’s outlook on

Thursday.

The average amount of gas flowing to U.S. LNG export plants fell to 10.9 bcfd so far in October from 11.5

bcfd in September. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants

can turn about 13.8 bcfd of gas into LNG.

Week ended Week ended Year ago Five-year

Oct 14 Oct 7 Oct 14 average

(Forecast) (Actual) Oct 14

U.S. weekly natgas storage change (bcf): +104 +125 +91 +73

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U.S. total natgas in storage (bcf): 3,335 3,231 3,448 3,525

U.S. total storage versus 5-year average -5.4% -6.4%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2021 (2017-2021)

Henry Hub 6.64 6.74 5.57 3.73 2.89

Title Transfer Facility (TTF) 41.58 43.97 30.84 16.04 7.49

Japan Korea Marker (JKM) 34.84 34.71 33.22 18.00 8.95

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

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 169 165 86 118 149

U.S. GFS CDDs 34 33 63 46 37

U.S. GFS TDDs 203 198 149 164 186

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

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Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 100.2 99.7 99.3 94.2 87.0

U.S. Imports from Canada 8.0 7.8 8.0 8.0 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 108.2 107.4 107.3 102.2 94.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 2.5 2.5 2.3 2.4

U.S. Exports to Mexico 5.6 5.5 5.6 5.9 5.3

U.S. LNG Exports 11.0 11.0 10.8 10.7 5.6

U.S. Commercial 5.7 6.2 8.4 5.5 6.8

U.S. Residential 5.6 6.6 10.9 5.3 7.3

U.S. Power Plant 31.6 32.2 31.0 29.8 29.0

U.S. Industrial 21.5 21.8 22.9 21.0 21.8

U.S. Plant Fuel 5.0 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 1.9 2.0 2.1 2.0 1.9

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 71.4 73.8 80.4 68.6 71.8

Total U.S. Demand 90.1 92.8 99.3 87.5 85.1

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

Week ended Week ended Week ended Week ended Week ended

Oct 14 Oct 7 Sep 30 Sep 23 Sep 16

Wind 10 9 10 8 6

Solar 3 4 3 3 3

Hydro 5 6 5 5 6

Other 3 3 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 40 41 41 42 45

Coal 19 18 19 19 21

Nuclear 19 21 19 19 18

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

Hub Current Day Prior Day

Henry Hub 6.25 6.60

Transco Z6 New York 5.39 5.44

PG&E Citygate 7.76 8.04

Dominion South 5.10 5.25

Chicago Citygate 5.49 5.81

Algonquin Citygate 5.53 6.06

SoCal Citygate 8.00 8.06

Waha Hub 4.06 4.32

AECO 3.15 1.07

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

Hub Current Day

New England 58.25 64.75

PJM West 72.00 75.75

Ercot North 54.20 67.75

Mid C 77.25 73.75

Palo Verde 64.25 62.00

SP-15 67.50 71.00

(Reporting by Scott DiSavino in New York and Marwa Rashad in London; Editing by Kirsten Donovan)

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