May 8, 2020 / 6:49 PM / 23 days ago

UPDATE 1-U.S. natgas futures fall on forecasts for lower demand in mid-May

 (Adds closing prices)
    May 8 (Reuters) - U.S. natural gas futures fell 4% on Friday on forecasts for lower demand in
mid-May due to milder weather and as businesses remain shut due to government lockdowns to stop the
spread of the coronavirus.
    Front-month gas futures for June delivery on the New York Mercantile Exchange fell 7.1 cents,
or 3.7%, to settle at $1.823 per million British thermal units, their lowest close since April 28.
    That kept front-month at the Henry Hub benchmark in Louisiana higher than the Title Transfer
Facility (TTF) in the Netherlands. Earlier this week, Henry Hub traded higher than both the
TTF and the Japan/Korea Marker (JKM) for the first time ever. TTF and JKM both fell to record
lows over the past couple of weeks.
    In addition, to the front-month, Henry Hub was trading higher than TTF in July
and August. Analysts said those high U.S. prices and low prices elsewhere would
likely prompt buyers of U.S. liquefied natural gas (LNG) to cancel more cargoes in coming months. In
April, buyers canceled about 20 U.S. cargoes that were due to be shipped in June.

    For the week, the U.S. front-month was down about 4% after rising about 8% last week.
    Looking ahead, U.S. gas futures for the balance of 2020 and calendar 2021 were
trading higher than the front-month on expectations demand will jump once governments loosen coronavirus
travel and work restrictions.
    The U.S. Energy Information Administration (EIA) projected gas production will fall to an annual
average of 91.7 billion cubic feet per day (bcfd) in 2020 and 87.5 bcfd in 2021 from a record 92.2 bcfd
in 2019 as low oil prices prompt energy firms cut spending on drilling. Those oil wells also produce a
lot of gas.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states has fallen to 90.1 bcfd
so far in May, down from an eight-month low of 92.8 bcfd in April and an all-time monthly high of 95.4
bcfd in November.
    The EIA projected coronavirus lockdowns will cut U.S. gas use - not including exports - to an
average of 83.8 bcfd in 2020 and 81.2 bcfd in 2021 from a record 85.0 bcfd in 2019.
    This is normally the mildest time of year when heating and cooling demand are lowest. But with the
weather still cooler than normal, Refinitiv projected demand in the Lower 48 states, including exports,
would rise from an average of 83.5 bcfd this week to 87.4 bcfd next week before falling to 82.7 bcfd
when the weather turns milder and demand destruction from the coronavirus starts to show up in the data.
    Refinitiv said U.S. LNG exports have averaged 7.3 bcfd so far in May, down from a four-month low of
8.1 bcfd in April and an all-time high of 8.7 bcfd in February.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                           May 8        May 1         May 8      average    
                                         (Actual)       (Actual)                  May 8     
 U.S. natgas storage (bcf):                +102           +109         +100        +85      
                                                                                            
                                                                                            
 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                              97            101           87          81           69
 U.S. GFS CDDs                              70             70           59          67           71
 U.S. GFS TDDs                             167            171          146         128          140
                                                                                            
 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              91.9           90.1         90.2        88.9         77.0
 U.S. Imports from Canada                  5.9            5.9          6.2         7.7          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         97.8           96.0         96.4        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            2.5          2.3         2.5          1.9
 U.S. Exports to Mexico                    4.7            4.5          4.7         4.5          3.9
 U.S. LNG Exports                          7.5            7.3          7.4         5.5          2.0
 U.S. Commercial                           7.3            6.6          8.0         6.1          5.5
 U.S. Residential                          9.2            7.8          10.4        6.9          6.1
 U.S. Power Plant                          26.1           26.2         25.5        26.4         25.3
 U.S. Industrial                           22.2           22.1         22.6        21.9         20.6
 U.S. Plant Fuel                           4.5            4.4          4.5         4.5          4.5
 U.S. Pipe Distribution                    1.9            1.8          1.9         1.8          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    71.5           69.2         73.0        67.7         64.0
 Total U.S. Demand                         86.4           83.5         87.4        80.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.83           1.90                              
 Transco Z6 New York NG-CG-NY-SNL        1.59           1.44                              
 PG&E Citygate NG-CG-PGE-SNL             2.74           2.86                              
 Dominion South NG-PCN-APP-SNL           1.48           1.42                              
 Chicago Citygate NG-CG-CH-SNL           1.84           1.89                              
 Algonquin Citygate NG-CG-BS-SNL         1.50           1.60                              
 SoCal Citygate NG-SCL-CGT-SNL           2.20           2.30                              
 Waha Hub NG-WAH-WTX-SNL                 1.56           1.76                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             16.75          18.75                              
 PJM West EL-PK-PJMW-SNL                20.33          25.00                              
 Ercot North EL-PK-ERTN-SNL             17.00          16.50                              
 Mid C EL-PK-MIDC-SNL                   16.25          18.50                              
 Palo Verde EL-PK-PLVD-SNL              23.25          27.25                              
 SP-15 EL-PK-SP15-SNL                   24.75          29.00                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski and Leslie Adler)
  
 
 
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