U.S. natgas futures little changed ahead of storage report

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U.S. natural gas futures were little changed on Thursday as the market waited for

direction from a federal report expected to show last week’s storage withdrawal was smaller than usual because

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the weather then was still warmer than normal and heating demand was low.

That lack of price movement came despite bearish forecasts for less cold weather and lower heating demand

in late December than previously expected.

That lack of price movement also came despite a bullish increase in gas flows to liquefied natural gas

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(LNG) export plants to their highest since before the Freeport LNG export plant shut in June and a drop in gas

output to a two-month low as extreme cold from North Dakota to Texas caused oil and gas wells to freeze.

Analysts forecast U.S. utilities pulled 45 billion cubic feet (bcf) of gas from storage during the week

ended Dec. 9. That compares with a decrease of 83 bcf in the same week last year and a five-year (2017-2021)

average decline of 93 bcf.

If correct, last week’s decrease would cut stockpiles to 3.417 trillion cubic feet (tcf), or 0.3% below the

five-year average of 3.427 tcf for this time of year.

Traders said the biggest uncertainty for the market remains when Freeport LNG will restart its LNG export

plant in Texas.

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After several delays, the company has said it was on track to restart the plant by the end of the year.

Many analysts, however, have said they do not expect Freeport to return until the first quarter of 2023 because

the company still has a lot of work to do to satisfy federal regulators before the plant is ready to restart.

Once Freeport returns, demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day

(bcfd) of gas into LNG.

Freeport shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human

error and fatigue, according to a report by consultants hired to review the incident and suggest corrective

actions.

A couple of vessels – Prism Diversity and Prism Courage – have been waiting in the Gulf of Mexico to pick

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up LNG from Freeport since at least early November. There are also several other ships sailing toward the

plant, including Elisa Larus, which is expected to arrive in late December, Point Fortin and Prism Agility

(early January) and Wilforce (late January).

Despite the Freeport shutdown, the amount of gas flowing to U.S. LNG export plants hit 13.0 bcfd on

Thursday, the most since June 4 – four days before Freeport shut. That’s because the nation’s six other big

export plants were operating near full capacity.

Front-month gas futures for January delivery on the New York Mercantile Exchange fell 1.5 cents, or

0.2%, to $6.415 per million British thermal units at 8:29 a.m. EST (1329 GMT). On Wednesday, the contract

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jumped over 7%.

Gas futures were up about 72% so far this year as much higher global prices feed demand for U.S. exports

due to supply disruptions and sanctions linked to Russia’s war in Ukraine.

Gas was trading at $42 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $33

at the Japan Korea Marker (JKM) in Asia.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.6 bcfd so far in

December, up from a monthly record of 99.5 bcfd in November.

On a daily basis, however, output was on track to drop about 3.4 bcfd over the past three days to a

preliminary two-month low of 97.2 bcfd on Thursday as freezing weather blankets parts of Texas, Oklahoma and

North Dakota, causing well freeze-offs.

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Week ended Week ended Year ago Five-year

Dec 9 Dec 2 Dec 9 average

(Forecast) (Actual) Dec 9

U.S. weekly natgas storage change (bcf): -45 -21 -83 -93

U.S. total natgas in storage (bcf): 3,417 3,462 3,430 3,427

U.S. total storage versus 5-year average -0.3% -1.6%

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 6.47 6.43 3.86 3.73 2.89

Title Transfer Facility (TTF) 41.79 41.25 37.67 16.04 7.49

Japan Korea Marker (JKM) 33.39 33.35 37.84 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 514 58 326 390 416

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U.S. GFS CDDs 1 2 13 5 4

U.S. GFS TDDs 515 520 339 395 420

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 99.7 99.5 100.0 95.7 89.8

U.S. Imports from Canada 8.2 9.2 10.0 8.8 8.9

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3

Total U.S. Supply 107.9 108.7 110.0 104.5 99.0

U.S. Demand (bcfd)

U.S. Exports to Canada 3.2 3.5 3.5 3.7 3.2

U.S. Exports to Mexico 5.4 5.0 5.4 5.5 5.0

U.S. LNG Exports 11.7 12.5 12.8 11.9 6.9

U.S. Commercial 13.5 14.9 19.9 12.6 14.6

U.S. Residential 21.8 24.8 34.6 20.3 24.6

U.S. Power Plant 31.5 30.7 33.9 27.5 27.3

U.S. Industrial 24.1 24.4 26.8 23.5 24.9

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

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U.S. Pipe Distribution 2.6 2.7 3.3 2.7 2.5

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 97.6 102.7 123.6 91.6 98.9

Total U.S. Demand 117.9 123.8 145.3 112.7 114.0

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

Week ended Week ended Week ended Week ended Week ended

Dec 16 Dec 9 Dec 2 Nov 25 Nov 18

Wind 10 9 15 9 9

Solar 1 2 2 2 3

Hydro 6 6 6 6 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 38 39 35 39 41

Coal 21 20 19 20 18

Nuclear 21 21 21 20 20

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

Hub Current Day Prior Day

Henry Hub 6.54 7.20

Transco Z6 New York 7.96 11.50

PG&E Citygate 23.22 48.33

Dominion South 5.31 5.61

Chicago Citygate 5.72 6.01

Algonquin Citygate 10.11 20.96

SoCal Citygate 26.21 50.15

Waha Hub 4.20 3.68

AECO 4.93 5.04

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

Hub Current Day Prior Day

New England 106.00 186.75

PJM West 80.75 90.00

Ercot North 52.50 50.25

Mid C 325.00 474.50

Palo Verde 269.50 400.00

SP-15 271.00 410.75

(Reporting by Scott DiSavino

Editing by Nick Zieminski)