U.S. natgas futures falls 3% on mild weather forecasts

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U.S. natural gas futures fell about 3% on Friday on record output and forecasts for

mild weather and low heating demand through mid November, which should allow utilities to inject more gas into

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storage than usual for at least a few more weeks.

That price decline came despite the return to service from maintenance of Berkshire Hathaway Energy’s 0.8

billion cubic feet per day (bcfd) Cove Point liquefied natural gas (LNG) export plant in Maryland, which will

boost U.S. demand for gas for exports.

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The market was still waiting for the return of Freeport LNG’s export plant in Texas. Freeport has said it

expects the facility to return to at least partial service in early- to mid-November following an unexpected

shutdown on June 8 due to a pipeline explosion.

At least three vessels were heading to Freeport, according to Refinitiv data. Prism Brilliance and Prism

Diversity were both waiting off the coast from the plant, while Prism Courage was expected to arrive on Nov.

1.

On its first day as the front-month, gas futures for December delivery fell 19.1 cents, or 3.3%, to

settle at $5.684 per million British thermal units (mmBtu).

That put the front-month up about 10% for the day since the December contract was trading much higher

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than where the now expired November future settled. That would be the highest close since Oct. 18 and the

biggest daily percentage gain since mid September.

For the week, the contract was on track to gain about 15% after plunging about 23% last week. That

would be its first weekly gain in 10 weeks.

U.S. gas futures are up about 53% 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 $32 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $30

at the Japan Korea Marker (JKM) in Asia.

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

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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 99.5 bcfd so far in

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

With the coming of seasonally cooler weather, Refinitiv projected average U.S. gas demand, including

exports, would rise from 94.3 bcfd this week to 97.0 bcfd next week and 101.6 bcfd in two weeks. The forecast

for next week was higher than Refinitiv’s outlook on Thursday due to an expected rise in LNG exports with the

return of Cove Point.

The average amount of gas flowing to U.S. LNG export plants fell to 11.2 bcfd so far in October due to the

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Cove Point outage, down from 11.5 bcfd in September and well below the 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.

During the first nine months of 2022, roughly 60%, or 6.3 bcfd, of U.S. LNG exports went to Europe, as

shippers diverted cargoes from Asia to fetch higher prices. Last year, just 29%, or about 2.8 bcfd, of U.S.

LNG exports went to Europe.

Week ended Week ended Year ago Five-year

Oct 28 Oct 21 Oct 28 average

(Forecast) (Actual) Oct 28

U.S. weekly natgas storage change (bcf): +96 +52 +66 +45

U.S. total natgas in storage (bcf): 3,490 3,394 3,602 3,636

U.S. total storage versus 5-year average -4.0% -5.5%

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

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Last Year Average Average

2021 (2017-2021)

Henry Hub 5.85 5.88 5.57 3.73 2.89

Title Transfer Facility (TTF) 31.09 32.91 30.84 16.04 7.49

Japan Korea Marker (JKM) 30.49 30.45 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 158 156 192 190 218

U.S. GFS CDDs 18 18 19 28 20

U.S. GFS TDDs 176 174 211 218 238

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 98.8 99.1 99.2 95.6 87.0

U.S. Imports from Canada 7.8 7.5 7.8 8.1 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 106.6 106.7 107.0 103.7 94.8

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U.S. Demand (bcfd)

U.S. Exports to Canada 2.2 2.5 2.5 1.9 2.4

U.S. Exports to Mexico 5.9 5.6 5.7 6.3 5.3

U.S. LNG Exports 11.5 11.4 11.9 10.9 5.6

U.S. Commercial 8.2 7.5 7.8 7.6 6.8

U.S. Residential 10.6 9.3 10.1 9.5 7.3

U.S. Power Plant 31.1 28.5 29.4 27.3 29.0

U.S. Industrial 23.4 22.5 22.6 21.9 21.8

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 2.1 2.0 2.0 2.0 1.9

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 80.4 74.9 76.9 73.3 71.8

Total U.S. Demand 100.0 94.3 97.0 92.4 85.1

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

Week ended Week ended Week ended Week ended Week ended

Oct 28 Oct 21 Oct 14 Oct 7 Sep 30

Wind 16 11 11 9 10

Solar 3 3 4 4 3

Hydro 5 5 5 6 5

Other 2 3 3 2 2

Petroleum 0 0 0 0 0

Natural Gas 37 39 41 41 41

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Coal 17 19 18 18 19

Nuclear 19 19 19 21 19

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

Hub Current Day Prior Day

Henry Hub 5.30 5.28

Transco Z6 New York 4.46 4.43

PG&E Citygate 7.39 7.39

Dominion South 4.35 4.30

Chicago Citygate 4.92 5.00

Algonquin Citygate 4.78 4.60

SoCal Citygate 5.85 5.77

Waha Hub 0.76 0.01

AECO 0.84 2.99

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

Hub Current Day Prior Day

New England 50.75 42.50

PJM West 64.75 66.00

Ercot North 41.00 35.50

Mid C 63.00 65.50

Palo Verde 49.50 48.75

SP-15 51.25 36.00

(Reporting by Scott DiSavino; Editing by David Holmes and Diane Craft)