April 29, 2020 / 7:20 PM / a month ago

UPDATE 1-U.S. natgas futures fall on mild forecasts, lower demand and exports

 (New throughout, updates prices, market activity and comments to close)
    April 29 (Reuters) - U.S. natural gas futures fell on Wednesday on forecasts for milder weather and
lower demand - especially export demand - over the next two weeks than previously expected.
    Traders noted gas prices were trending higher over the past few weeks on slowing output as collapsing
crude prices prompted drillers to  shut oil wells in shale basins that also produce a lot of gas. Still,
gas prices have had a limited upside as global lockdowns to fight the coronavirus look likely to reduce
demand and exports of liquefied natural gas (LNG).
    "It is not clear how fast industrial and power demand will return and the threat of additional virus
outbreaks could bring renewed demand pullbacks," Daniel Myers, market analyst at Gelber & Associates in
Houston, said, noting "Another concerning development from the market’s perspective is the cancellation
of up to 25 U.S. LNG cargoes for June."
    On its first day as the front-month, gas futures for June delivery fell 7.9 cents, or 4.1%, to
settle at $1.869 per million British thermal units. That, however, is still about 7% over where the May
contract expired.
    Looking ahead, 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 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 drillers shut wells and cut spending.
    Data provider Refinitiv said gas output in the U.S. Lower 48 states averaged 92.7 bcfd so far in
April, down from 93.2 bcfd in March and an all-time monthly high of 95.3 bcfd in November.
    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.
    With milder spring weather coming, Refinitiv projected demand in the Lower 48 states, including
exports, would slide from an average of 86.3 bcfd this week to 84.6 bcfd next week. That compares with
Refinitiv's forecasts on Tuesday of 86.7 bcfd this week and 85.1 bcfd next week.
    Even though the coronavirus is cutting gas use worldwide, EIA still expects U.S. exports to hit
record highs in coming years as more LNG export plants and pipelines enter service. Still, the agency has
reduced its projections on the pace of that growth due to the pandemic.
    U.S. LNG exports averaged 8.1 bcfd so far in April, according to Refinitiv, down from 8.3 bcfd in
March and an all-time monthly high of 8.8 bcfd in February.
              
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 17      April 24     average    
                                       24(Forecast)     (Actual)                 April 24    
 U.S. natgas storage (bcf):                +53            +43          +114         +74      
                                                                                             
                                                                                             
 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                             105            110          110          97            93
 U.S. GFS CDDs                              59             59           55          57            53
 U.S. GFS TDDs                             164            169          165          154          146
                                                                                             
 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              92.6           91.8         91.9        89.6          77.2
 U.S. Imports from Canada                  5.9            6.0          6.6          7.7          8.1
 U.S. LNG Imports                          0.0            0.0          0.0          0.0          0.1
 Total U.S. Supply                         98.5           97.8         98.6        97.3          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.8          2.7          2.5          2.3
 U.S. Exports to Mexico                    4.6            4.6          4.7          4.6          3.7
 U.S. LNG Exports                          8.1            7.5          7.9          5.2          1.8
 U.S. Commercial                           9.1            7.3          6.7          7.2          8.2
 U.S. Residential                          12.5           9.1          8.1          9.1          11.3
 U.S. Power Plant                          27.0           26.5         25.9        26.8          21.5
 U.S. Industrial                           22.7           22.1         22.0        22.2          23.0
 U.S. Plant Fuel                           4.6            4.5          4.5          4.5          4.6
 U.S. Pipe Distribution                    2.1            1.9          1.8          1.9          2.2
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    78.0           71.4         69.3        71.8          70.9
 Total U.S. Demand                         93.1           86.3         84.6        84.1          78.7
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.80           1.68                               
 Transco Z6 New York NG-CG-NY-SNL        1.69           1.55                               
 PG&E Citygate NG-CG-PGE-SNL             2.52           2.34                               
 Dominion South NG-PCN-APP-SNL           1.60           1.48                               
 Chicago Citygate NG-CG-CH-SNL           1.72           1.72                               
 Algonquin Citygate NG-CG-BS-SNL         1.75           1.78                               
 SoCal Citygate NG-SCL-CGT-SNL           1.87           1.75                               
 Waha Hub NG-WAH-WTX-SNL                 1.49           1.20                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             20.25          18.75                               
 PJM West EL-PK-PJMW-SNL                16.75          18.75                               
 Ercot North EL-PK-ERTN-SNL             21.25          29.25                               
 Mid C EL-PK-MIDC-SNL                   13.71          16.86                               
 Palo Verde EL-PK-PLVD-SNL              23.00          28.50                               
 SP-15 EL-PK-SP15-SNL                   23.75          23.75                               
 
 (Reporting by Scott DiSavino; Editing by David Gregorio)
  
 
 
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below