U.S. natgas futures turn negative on big storage build

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U.S. natural gas futures gave up earlier gains and turned slightly negative on

Thursday on a bigger-than-usual stockpile build and a revised increase in the amount of gas in storage from

prior weeks.

Also pressuring prices lower was a decline in forecast U.S. gas demand this week due in part to the

ongoing shutdown of the Freeport liquefied natural gas (LNG) export plant in Texas.

Earlier in the day gas prices surged over 5% on forecasts for record power demand in Texas, soaring global

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gas prices and a small decline in U.S. daily gas output.

The U.S. Energy Information Administration (EIA) said U.S. utilities added 92 billion cubic feet (bcf) of

gas to storage during the week ended June 10.

That was in line with the 91-bcf build analysts forecast in a Reuters poll and compared with a 28-bcf

weekly rise a year earlier and a five-year (2017-2021) average increase of 79 bcf. Past builds were low due to

a reclassification of stockpiles in California last year.

The Freeport shutdown on June 8 reduced the amount of U.S. gas available to the rest of the world,

especially in Europe where most U.S. LNG has gone as countries there wean themselves off Russian energy after

Moscow invaded Ukraine.

Gas prices at the European benchmark Title Transfer Facility in the Netherlands were up about

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5% Thursday afternoon after soaring as much as 32% earlier in the session after Russia reduced pipeline gas

exports to Europe.

But leaving more gas in the United States should give utilities a chance to rebuild extremely low

stockpiles more quickly. Freeport, the second-biggest U.S. LNG export plant, consumes about 2 billion cubic

feet per day (bcfd) of gas, so a 90-day shutdown would make about 180 bcf more gas available to the U.S.

market.

Front-month gas futures for July delivery on the New York Mercantile Exchange (NYMEX) fell 7.6

cents, or 1.0%, to $7.344 per million British thermal units (mmBtu) at 1:55 p.m. EDT (1755 GMT).

With the U.S. Federal Reserve expected to keep raising interest rates, open interest in NYMEX futures

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fell on Wednesday to its lowest since September 2016 for a fifth day in a row as investors continued

to cut back on risky assets.

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Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 94.8 bcfd so far in

June from 95.2 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021.

With hotter weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise

from 92.8 bcfd this week to 94.1 bcfd next week. The forecast for this week was lower than Refinitiv’s outlook

on Wednesday.

Power demand in Texas will likely set new all-time highs on Thursday and Monday after breaking the prior

record on June 12 as economic growth boosts overall use and homes and businesses keep air conditioners cranked

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up to escape a lingering heatwave.

The average amount of gas flowing to U.S. LNG export plants fell to 11.6 bcfd so far in June from 12.5

bcfd in May, according to data from Refinitiv. That compares with a monthly record of 12.9 bcfd in March. The

seven big U.S. export plants can turn about 13.6 bcfd of gas into LNG.

Week ended Week ended Year ago Five-year

Jun 10 Jun 3 Jun 10 average

(Actual) (Actual) Jun 10

U.S. weekly natgas storage change (bcf): +92 +102 +28 +79

U.S. total natgas in storage (bcf): 2,095 2,003 2,425 2,418

U.S. total storage versus 5-year average -13.4% -14.4%

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 7.76 7.42 3.27 3.73 2.89

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Title Transfer Facility (TTF) 45.31 34.89 10.27 16.04 7.49

Japan Korea Marker (JKM) 33.91 23.81 11.58 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 7 8 5 10 10

U.S. GFS CDDs 212 208 183 168 168

U.S. GFS TDDs 219 216 188 178 178

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 94.9 94.8 95.0 92.0 84.6

U.S. Imports from Canada 7.9 8.2 7.8 7.8 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 102.8 103.0 102.8 99.8 92.4

U.S. Demand (bcfd)

U.S. Exports to Canada 2.6 2.2 2.2 2.1 2.2

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U.S. Exports to Mexico 6.0 6.1 6.1 5.3 5.1

U.S. LNG Exports 12.3 10.7 11.6 9.6 4.3

U.S. Commercial 4.6 4.5 4.4 4.4 4.7

U.S. Residential 3.9 3.7 3.7 3.5 4.3

U.S. Power Plant 33.2 37.8 38.2 36.3 32.8

U.S. Industrial 20.7 20.9 21.0 20.7 20.9

U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.7

U.S. Pipe Distribution 1.8 2.0 2.0 1.9 1.8

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 69.0 73.7 74.1 71.6 69.3

Total U.S. Demand 89.9 92.8 94.1 88.6 80.9

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

Week ended Week ended Week ended Week ended Week ended

Jun 17 Jun 10 Jun 3 May 27 May 20

Wind 12 8 12 12 12

Solar 3 5 4 4 4

Hydro 7 7 7 7 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 37 41 36 37 37

Coal 20 20 19 20 20

Nuclear 18 19 19 19 19

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

Hub Current Day Prior Day

Henry Hub 7.72 7.68

Transco Z6 New York 7.32 6.75

PG&E Citygate 8.49 8.60

Dominion South 6.95 6.80

Chicago Citygate 7.32 6.98

Algonquin Citygate 7.48 6.90

SoCal Citygate 7.70 7.74

Waha Hub 7.23 7.07

AECO 5.98 7.00

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

Hub Current Day

New England 73.25 73.75

PJM West 153.50 179.50

Ercot North 86.50 87.00

Mid C 54.67 2.25

Palo Verde 72.75 61.25

SP-15 66.25 65.50

(Reporting by Scott DiSavino

Editing David Gregorio and Josie Kao)

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