U.S. natgas futures rebound in choppy trade despite bearish outlook

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U.S. natural gas futures rose in choppy trading on Monday, buoyed by technicals and

slightly lower production estimates for the week, although elevated overall output and lower consumption

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forecasts clouded the outlook.

Front-month gas futures NGc1 for October delivery rose 28.6 cents, or 3.6%, to $8.28 per million British

thermal units (mmBtu) by 11:17 a.m. EDT (1517 GMT), reversing some declines from earlier in the session.

The contract fell about 9% last week, its biggest weekly loss since late June and the first time it fell

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for three weeks in a row since early July.

“The gas market has seen some pretty explosive volatility lately, so short-term fundamental shifts like

that might have less of an impact. Some traders might just feel the sell-off of early September has gone too

far,” said John Abeln, analyst with data provider Refinitiv.

Data provider Refinitiv projected average gas output in the U.S. Lower 48 states at 98.9 billion cubic

feet per day (bcfd) for the current week, slightly lower than the 99.3 bcfd in the prior week. But this was

well above the five-year average of 87 bcfd.

However, some analysts said there did not seem to be any clear fundamental driver at this point for the

current uptick, although a break above technical resistance seemed to trigger fresh buying.

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So far this year, gas futures were up about 124% as higher prices in Europe and Asia keep demand for U.S.

LNG exports strong. Global gas prices have soared due to supply disruptions and sanctions linked to Russia’s

Feb. 24 invasion of Ukraine.

The rise in gas futures, meanwhile, came despite the ongoing outage at the Freeport liquefied natural gas

(LNG) export plant in Texas, which has left more gas in the United States for utilities to inject into

stockpiles for next winter.

Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 bcfd of gas before it shut on

June 8. Freeport LNG expects the facility to return to at least partial service in early to mid-November.

Dutch wholesale gas prices, meanwhile, fell on comfortable supply and storage levels while prompt British

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prices rose in expectation of higher demand over the weekend.

Last week, gas speculators increased net short positions by 27,316 contracts to 49,387 on the New York

Mercantile and Intercontinental Exchanges, according to the U.S. Commodity Futures Trading Commission’s

Commitments of Traders report.

“One particularly bullish catalyst that has helped to underpin gas futures prices this summer is

exceptionally robust powerburn for the last few months, especially as there has been a notable absence of wind

generation,” analysts at Gelber & Associates said in a note.

But as temperatures pull back toward more “demand neutral” conditions across most of the U.S., storage

should begin to see some impressive weekly gas for the duration of the refill season, they added.

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Week ended Week ended Year ago Five-year

Sep 9 Sep 2 Sep 9 average

(Forecast) (Actual) Sep 9

U.S. weekly natgas storage change (bcf): +64 +54 +78 +82

U.S. total natgas in storage (bcf): 2,758 2,694 2,994 3,125

U.S. total storage versus 5-year average -11.7% -11.5%

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 8.03 8.11 5.11 3.73 2.89

Title Transfer Facility (TTF) 57.94 62.32 22.61 16.04 7.49

Japan Korea Marker (JKM) 53.90 52.84 23.35 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 15 10 16 30 38

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U.S. GFS CDDs 122 149 121 124 111

U.S. GFS TDDs 137 159 137 154 149

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 99.3 98.9 99.3 87.0

U.S. Imports from Canada 7.7 7.9 7.9 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.1

Total U.S. Supply 107.1 106.8 107.2 95.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 2.5 2.4 2.4

U.S. Exports to Mexico 5.4 5.6 5.6 5.3

U.S. LNG Exports 11.3 11.3 10.7 4.9

U.S. Commercial 4.5 4.7 4.8 4.9

U.S. Residential 3.6 3.8 4.1 3.9

U.S. Power Plant 41.7 37.0 37.1 33.2

U.S. Industrial 21.4 21.3 21.3 21.2

U.S. Plant Fuel 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 2.1 2.0 2.0 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

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Total U.S. Consumption 78.4 73.8 74.3 70.3

Total U.S. Demand 97.2 93.2 93.0 82.9

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

Week ended Week ended Week ended Week ended Week ended

Sep 16 Sep 9 Sep 2 Aug 26 Aug 19

Wind 7 5 7 5 6

Solar 2 3 3 3 3

Hydro 6 6 5 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 43 45 44 44 42

Coal 20 21 21 22 22

Nuclear 19 18 17 18 19

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

Hub Current Day Prior Day

Henry Hub 8.31 8.27

Transco Z6 New York 7.02 7.38

PG&E Citygate 8.82 9.29

Dominion South 7.10 7.13

Chicago Citygate 7.34 7.53

Algonquin Citygate 7.60 7.45

SoCal Citygate 7.86 12.25

Waha Hub 7.35 6.95

AECO 2.78 3.78

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

Hub Current Day Prior Day

New England 73.00 75.25

PJM West 99.50 103.25

Ercot North 77.75 85.50

Mid C 107.00 105.00

Palo Verde 91.25 164.05

SP-15 93.75 169.75

(Reporting by Kavya Guduru in Bengaluru; editing by Jonathan Oatis)