U.S. natgas futures up 1% on hotter forecasts for next week


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U.S. natural gas futures edged up about 1% on Wednesday, on forecasts for hotter weather

and more air conditioning demand next week than previously expected.

That price increase came despite a rise in output to record highs in recent days.

So far this summer, electric companies have burned record amounts of gas to meet soaring power use to keep

air conditioners humming. Power demand in Texas was expected to break records again this week.

Gas-fired plants have provided more than 40% of U.S. power in recent weeks, according to federal energy

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data, even though gas futures soared about 52% in July. That is partly because coal prices keep

hitting record highs, making it uneconomical for some generators to use their coal-fired plants.

One factor weighing on gas futures most of the summer was the shutdown of the Freeport liquefied natural

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

are extremely low stockpiles.

Freeport LNG, 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 estimated that the facility will return to partial service in

October. Some analysts say the outage could last longer.

Front-month gas futures rose 7 cents, or 0.9%, to $7.776 per million British thermal units (mmBtu)

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at 8:16 a.m. EDT (1216 GMT).

So far this year, the front-month was up about 108 as much higher prices in Europe and Asia keep demand

for U.S. LNG exports strong, especially since the amount of gas from Russia to Europe has dropped following

Moscow’s invasion of Ukraine on Feb. 24.

Gas was trading around $61 per mmBtu in Europe and $45 in Asia.

TOP EXPORTER

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 because its plants were already

operating at full capacity.

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

(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – held at 2.5

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bcfd on Tuesday, the same as Monday.

That compares with an average of 2.8 bcfd in July and 10.4 bcfd in August 2021.

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

all the fuel it needs for domestic use, while capacity constraints limit LNG exports.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.5 bcfd so far in

August from a record 96.7 bcfd in July.

On a daily basis, however, output was on track to drop 1.9 bcfd to a preliminary 96.4 bcfd on Wednesday

after soaring 2.4 bcfd to a daily record high of 98.4 bcfd on Friday. Preliminary data is often changed later

in the day.

With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would

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rise from 99.5 bcfd this week to 101.3 bcfd next week. The forecast for next week was higher than Refinitiv’s

outlook on Tuesday.

The average amount of gas flowing to U.S. LNG export plants rose to 11.0 bcfd so far in August from 10.9

bcfd in July. That compares with a 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.

Week ended Week ended Year ago Five-year

Jul 29 Jul 22 Jul 29 average

(Forecast) (Actual) Jul 29

U.S. weekly natgas storage change (bcf): +30 +32 +16 +33

U.S. total natgas in storage (bcf): 2,446 2,416 2,725 2,794

U.S. total storage versus 5-year average -12.5% -12.5%

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 7.85 7.71 4.03 3.73 2.89

Title Transfer Facility (TTF) 61.56 61.96 15.43 16.04 7.49

Japan Korea Marker (JKM) 45.28 44.83 16.36 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 1 1 1 3 4

U.S. GFS CDDs 251 246 209 205 196

U.S. GFS TDDs 252 247 210 208 200

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 96.8 97.9 98.2 93.7 86.5

U.S. Imports from Canada 8.2 8.1 8.2 7.9 8.0

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 104.9 106.0 106.4 101.6 94.6

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U.S. Demand (bcfd)

U.S. Exports to Canada 2.5 2.6 2.4 2.2 2.5

U.S. Exports to Mexico 6.0 5.3 6.0 6.4 5.4

U.S. LNG Exports 10.7 10.9 10.4 10.5 4.4

U.S. Commercial 4.4 4.4 4.4 4.4 4.5

U.S. Residential 3.6 3.5 3.5 3.5 3.4

U.S. Power Plant 43.9 44.3 45.9 37.0 38.8

U.S. Industrial 21.3 21.4 21.4 20.9 21.2

U.S. Plant Fuel 4.8 4.8 4.9 4.8 4.8

U.S. Pipe Distribution 2.1 2.1 2.2 2.1 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 80.1 80.7 82.5 72.8 74.9

Total U.S. Demand 99.3 99.5 101.3 91.9 87.2

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

Week ended Week ended Week ended Week ended Week ended

Aug 5 Jul 29 Jul 22 Jul 15 Jul 8

Wind 7 7 8 6 8

Solar 3 3 3 3 4

Hydro 6 5 6 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 42 42 45 44 42

Coal 22 22 22 21 21

Nuclear 18 17 17 17 17

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

Hub Current Day Prior Day

Henry Hub 8.01 8.20

Transco Z6 New York 7.47 7.51

PG&E Citygate 8.82 9.13

Dominion South 7.05 7.16

Chicago Citygate 7.51 7.68

Algonquin Citygate 7.83 7.99

SoCal Citygate 9.14 9.04

Waha Hub 7.12 7.30

AECO 4.37 4.55

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

Hub Current Day

New England 109.50 114.00

PJM West 126.75 121.50

Ercot North 101.25 87.00

Mid C 72.00 65.67

Palo Verde 93.50 90.75

SP-15 94.50 92.00

(Reporting by Scott DiSavino; Editing by David Holmes)

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