U.S. natgas survives rough December to end roller-coaster year higher

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

weather, yet the year’s hot commodity was poised for its third consecutive annual rise as supply disruptions

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due to the Russia-Ukraine war sent tremors across global gas markets.

Despite posting their worst monthly showing in four years in December, prices notched the longest streak of

annual gains, according to Refinitiv data.

The contract has added about 20% in what has been tipped as the most volatile year for the commodity,

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having surpassed the $10 per million British thermal units (mmBtu) level for the first time in 14 years.

Prices halved since then, however, with the contract settling down 8.4 cents, or 1.8%, at

$4.475/mmBtu on Friday, pressured by record-high U.S. output and milder weather which has reduced demand for

heating. The contract hit its lowest level since March 1 during the session and marked its worst quarterly loss

in a year.

“With warmer than normal weather ahead of us, I believe the draws for the next several weeks are going to

be much lower than the five-year average, especially for the first week of January,” said Zhen​ Zhu, managing

consultant at C.H. Guernsey and Co in Oklahoma City, Oklahoma.

Data provider Refinitiv estimated 345 heating degree days (HDDs) over the next two weeks in the lower 48

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U.S. states. The normal is 440 HDDs for this time of year.

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 C).

“Until there is solid enough evidence that more bitterly cold weather is on the cusp of dominating the bulk

of the nation, it’s likely that gas market bears will continue to keep adding downside pressure on prices,”

Gelber & Associates said in a note.

Market participants are also keenly awaiting the restart of the long-shut Freeport LNG liquefied natural

gas export plant in Texas, in the second half of January, pending regulatory approval.

Week ended Week ended Year ago Five-year

Dec 30 Dec 23 Dec 23 average

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(Forecast) (Actual) Dec 23

U.S. weekly natgas storage change (bcf): -220 -213 -125 -106

U.S. total natgas in storage (bcf): 2,892 3,112 3,245 3,197

U.S. total storage versus 5-year average -9.5% -2.7%

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 4.54 4.56 3.86 3.73 2.89

Title Transfer Facility (TTF) 24.19 27.96 37.67 16.04 7.49

Japan Korea Marker (JKM) 28.83 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 345 315 442 438 440

U.S. GFS CDDs 4 4 7 4 3

U.S. GFS TDDs 349 319 449 442 443

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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 91.6 92.8 89.8

U.S. Imports from Canada 9.1 8.1 8.4 8.9

U.S. LNG Imports 0.0 0.0 0.0 0.3

Total U.S. Supply 107.1 99.7 101.2 99.0

U.S. Demand (bcfd)

U.S. Exports to Canada 2.5 2.11 1.9 3.2

U.S. Exports to Mexico 5.3 5.2 5.2 5.0

U.S. LNG Exports 12.7 11.9 12.3 6.9

U.S. Commercial 18.7 12.6 16.1 14.6

U.S. Residential 32.3 20.4 27.0 24.6

U.S. Power Plant 33.7 28.4 31.6 27.3

U.S. Industrial 26.5 23.7 25.2 24.9

U.S. Plant Fuel 4.8 4.5 4.6 4.9

U.S. Pipe Distribution 3.2 2.5 2.9 2.5

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

Total U.S. Consumption 119.3 92.1 107.5 98.9

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Total U.S. Demand 139.9 111.4 126.9 114.0

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

Week ended Week ended Week ended Week ended Week ended

Dec 30 Dec 23 Dec 16 Dec 9 Dec 2

Wind 10 9 12 9 15

Solar 2 2 2 2 2

Hydro 6 6 6 6 6

Other 2 2 2 2 2

Petroleum 2 0 0 0 0

Natural Gas 35 37 37 39 35

Coal 25 24 20 20 19

Nuclear 18 19 20 21 21

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

Hub Current Day Prior Day

Henry Hub 3.77 4.05

Transco Z6 New York 3.59 5.02

PG&E Citygate 16.11 22.87

Dominion South 3.00 3.51

Chicago Citygate 3.47 3.98

Algonquin Citygate 3.64 5.45

SoCal Citygate 14.96 22.36

Waha Hub 0.01 0.85

AECO 4.47 4.77

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

Hub Current Day Prior Day

New England 54.00 86.50

PJM West 43.25 50.75

Ercot North 29.50 26.00

Mid C 125.00 221.60

Palo Verde 120.00 180.50

SP-5 129.75 185.00

(Reporting by Rahul Paswan and Swati Verma in Bengaluru;

Editing by Tomasz Janowski and Matthew Lewis)