U.S. natgas futures slide 4% on rising output, less demand next week


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U.S. natural gas futures fell about 4% on Wednesday from a seven-week high in the

prior session on record gas output and forecasts for less demand next week than previously expected.

That price decline came despite a decline in flows from Russia to Europe on the Nord Stream gas pipe,

forecasts for hotter weather through mid August than previously expected, record coal prices and the coming

expiration of the front-month contract.

The contract was on track to gain about 61% in July, which is just shy of the record monthly percentage

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gain of 63% in September 2009.

Extreme heat has already caused U.S. power demand to hit all-time highs several times this summer in many

states, including Texas, as homes and businesses crank up their air conditioners.

To keep those air conditioners humming, electric companies have burned more gas than usual due to the

retirement of dozens of coal power plants in recent years and because coal prices were at record

highs, making it uneconomic for many generators to switch on some of their remaining coal plants.

The spike in gas prices also 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 low

stockpiles.

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Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day

(bcfd) of gas before it shut on June 8. Freeport LNG estimated the facility will return to partial service in

October. Some analysts say the outage could last longer.

On its last day as the front-month, gas futures for August delivery were down 34.9 cents, or 3.9%,

to $8.644 per million British thermal units (mmBtu) at 8:56 a.m. EDT (1256 GMT). On Tuesday, the contract rose

to an intraday 14-year high of $9.752 per mmBtu and closed at its highest since June 7.

In the spot market, next-day gas at the Henry Hub in Louisiana rose to $9.46 per mmBtu for

Wednesday, its highest since hitting a record $23.86 during the February freeze of 2021.

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So far this year, the front-month was up 133% as much higher prices in Europe and Asia keep demand for

U.S. LNG exports strong, especially since Europe started reducing the amount of gas it imports from Russia

since Moscow’s invasion of Ukraine on Feb. 24.

Gas was trading around $60 per mmBtu in Europe and at $40 in Asia. That put European

prices at their highest since hitting a record near $69 in early March as Russia cut gas flows on the Nord

Stream pipeline.

The United States became the world’s top LNG exporter during the first half of 2022. But no matter how

high global gas prices rise, the United States cannot export any more LNG due to capacity constraints.

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

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(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route slid to 3.6 bcfd

on Wednesday from an average of 3.8 bcfd since Nord Stream exited a maintenance outage on July 21.

That was up from around 1.4 bcfd during the 10 days Nord Stream was shut and compares with an average of

3.7 bcfd during the month before Nord Stream shut and an average of 9.4 bcfd in July 2021.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states had risen to 96.2 bcfd so far

in July from 95.3 bcfd in June. That compares with a monthly record high of 96.1 bcfd in December 2021.

Week ended Week ended Year ago Five-year

Jul 22 Jul 15 Jul 22 average

(Forecast) (Actual) Jul 22

U.S. weekly natgas storage change (bcf): +30 +32 +38 +32

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U.S. total natgas in storage (bcf): 2,431 2,401 2,709 2,761

U.S. total storage versus 5-year average -12.0% -12.0%

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 9.05 8.99 3.82 3.73 2.89

Title Transfer Facility (TTF) 58.63 58.19 12.49 16.04 7.49

Japan Korea Marker (JKM) 40.21 39.39 13.77 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 4 4 2 2 3

U.S. GFS CDDs 248 239 207 210 201

U.S. GFS TDDs 252 243 209 212 205

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 96.3 96.3 96.8 93.4 85.6

U.S. Imports from Canada 8.1 8.3 8.4 8.2 8.1

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 104.4 104.6 105.3 101.6 93.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.2 2.5 2.4 2.0 2.3

U.S. Exports to Mexico 6.2 6.0 6.1 6.5 5.2

U.S. LNG Exports 10.8 10.7 10.0 10.8 4.5

U.S. Commercial 4.4 4.4 4.4 4.4 4.4

U.S. Residential 3.5 3.6 3.6 3.5 3.6

U.S. Power Plant 45.7 44.0 42.1 42.1 39.6

U.S. Industrial 21.3 21.3 21.3 21.0 20.8

U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.7

U.S. Pipe Distribution 2.2 2.1 2.1 2.2 2.0

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 82.0 80.2 78.4 78.1 75.2

Total U.S. Demand 101.1 99.3 97.0 97.4 87.2

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

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Week ended Week ended Week ended Week ended Week ended

Jul 29 Jul 22 Jul 15 Jul 8 Jul 1

Wind 9 8 6 8 9

Solar 3 3 3 4 4

Hydro 5 6 6 6 8

Other 2 2 2 2 1

Petroleum 0 0 0 0 0

Natural Gas 42 45 44 42 41

Coal 23 22 21 21 21

Nuclear 17 17 17 17 16

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

Hub Current Day Prior Day

Henry Hub 9.46 8.52

Transco Z6 New York 8.41 7.90

PG&E Citygate 10.05 9.48

Dominion South 8.16 7.70

Chicago Citygate 8.68 8.23

Algonquin Citygate 9.01 8.19

SoCal Citygate 9.81 9.36

Waha Hub 8.20 8.12

AECO 5.40 4.68

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

Hub Current Day

New England 99.75 100.00

PJM West 114.75 109.75

Ercot North 110.00 105.75

Mid C 139.00 130.00

Palo Verde 105.00 96.25

SP-15 99.50 99.75

(Reporting by Scott DiSavino

Editing by Mark Potter)

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