U.S. natgas prices slump to 10-month low on milder weather forecast

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U.S. natural gas futures fell to a 10-month low on Thursday on forecasts for warmer

weather over the next two weeks, despite a bigger than expected storage draw.

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Prices stayed negative even after the U.S. Energy Information Administration (EIA) said utilities pulled

213 billion cubic feet (bcf) of gas from storage due to severe cold in the week ended Dec. 23, exceeding the

201 bcf decline analysts forecast in a Reuters poll. That compared with a decrease of 125 bcf in the same week

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last year and a five-year (2017-2021) average decline of 106 bcf.

On the first day as front-month, February gas futures slipped 15 cents, or 3.2%, to settle at

$4.559 per million British thermal units. During the session they fell 6% to $4.422 mmBtu, their lowest since

early March.

The weather outlook for warmer average temperatures outweighed the storage report, said Robert DiDona of

Energy Ventures Analysis. With so many factors in the market, “the initial response from the trading community

is to sell,” he added.

Data provider Refinitiv estimated 315 heating degree days (HDDs) over the next two weeks in the lower 48

U.S. states, down from 327 HDDs estimated on Wednesday. The normal is 439 HDDs for this time of year.

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HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day’s average

temperature is below 65 degrees Fahrenheit (18 degrees Celsius).

With the weather expected to turn mild, Refinitiv projected average U.S. gas demand, including exports,

would drop from 142.6 bcf per day (bcfd) this week to 111.6 bcfd in the next week.

Gas output was up about 10 bcfd over the past four days in the U.S. lower 48 states after dropping to 80.4

bcfd on Saturday, its biggest drop in daily output since the February freeze of 2021.

Prices are up almost 23% in 2022, setting up a third straight yearly rise.

U.S. daily demand from the four biggest gas-consuming sectors – residential, commercial, power and

industrial – reached an all-time high of 148.5 bcf on Friday, according to Refinitiv data.

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Freeport LNG said on Friday it was again delaying the restart of its long-shut liquefied natural gas

export plant in Texas, this time from the end of the year to the second half of January, pending regulatory

approval.

The Freeport plant shut on June 8 after a pipe failure caused an explosion due to inadequate operating and

testing procedures, human error and fatigue, according to a report by consultants hired to review the incident

and suggest action.

Year ago Five-year

Week ended Week ended Dec 23 average

Dec 23 Dec 23

(Actual)

Dec 23

(Forecast)

U.S. weekly natgas storage change (bcf): -125 -106

-213 -201

U.S. total natgas in storage (bcf): 3,245 3,197

3,112 3,124

U.S. total storage versus 5-year average

-2.7% -2.3%

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Global Gas Benchmark Futures ($ per mmBtu) Current Day This Month Prior Year Five Year

Prior Day Last Year Average Average

2021 (2017-2021)

Henry Hub 4.56 4.68 3.86 3.73 2.89

Title Transfer Facility (TTF) 27.96 27.70 37.67 16.04 7.49

Japan Korea Marker (JKM) — 28.18 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 315 327 437 436 439

U.S. GFS CDDs 4 4 9 4 3

U.S. GFS TDDs 319 331 445 440 442

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 97.9 86.1 87.3 89.8

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U.S. Imports from Canada 9.1 10.1 7.8 8.9

U.S. LNG Imports 0.0 0.0 0.0 0.3

Total U.S. Supply 107.1 96.2 95.1 99.0

U.S. Demand (bcfd)

U.S. Exports to Canada 2.5 1.5 1.5 3.2

U.S. Exports to Mexico 5.3 5.0 5.2 5.0

U.S. LNG Exports 12.7 10.7 12.0 6.9

U.S. Commercial 18.7 20.8 12.6 14.6

U.S. Residential 32.3 36.2 20.5 24.6

U.S. Power Plant 33.7 33.9 29.1 27.3

U.S. Industrial 26.5 26.8 23.7 24.9

U.S. Plant Fuel 4.8 4.3 4.3 4.9

U.S. Pipe Distribution 3.2 3.3 2.5 2.5

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

Total U.S. Consumption 119.3 125.4 92.8 98.9

Total U.S. Demand 139.9 142.6 111.6 114.0

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

Week ended Week ended Week ended Week ended

Week ended Dec 23 Dec 16 Dec 9 Dec 2

Dec 30

Wind 9 12 9 15

10

Solar 2 2 2 2 2

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Hydro 6 6 6 6 6

Other 2 2 2 2 2

Petroleum 2 0 0 0 0

Natural Gas 37 37 39 35

36

Coal 24 20 20 19

25

Nuclear 19 20 21 21

18

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

Hub Current Day Prior Day

Henry Hub 4.05 4.88

Transco Z6 New York 5.02 6.28

PG&E Citygate 22.87 27.49

Dominion South 3.51 4.55

Chicago Citygate 3.98 5.00

Algonquin Citygate 5.45 5.90

SoCal Citygate 22.36 29.59

Waha Hub 0.85 1.84

AECO 4.77 5.91

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

Hub Current Day Prior Day

New England 86.50 239.00

PJM West 50.75 78.00

Ercot North 26.00 23.50

Mid C 221.60 215.00

Palo Verde 180.50 200.00

SP-5 185.00 213.25

(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Chris Reese and David Gregorio)