May 18, 2020 / 9:01 PM / 6 days ago

UPDATE 1-U.S. natgas futures jump over 8% as output slows

 (Adds closing prices)
    May 18 (Reuters) - U.S. natural gas futures jumped over 8% on Monday on slowing output as energy
firms shut wells and slash spending on new oil drilling after crude prices sank earlier this year due to
demand destruction from the coronavirus. Those oil wells also produce a lot of gas.
    Front-month gas futures for June delivery on the New York Mercantile Exchange (NYMEX) rose
13.7 cents, or 8.3%, to settle at $1.783 per million British thermal units. That was their biggest daily
percentage gain since April 20.
    Last week, however, gas speculators cut their net long positions on the NYMEX and Intercontinental
Exchange for the first time in six weeks as government lockdowns to stop the spread of the coronavirus
cut energy use, causing fuel prices and exports to drop.
    U.S. crude futures were still down about 45% since the start of the year, even though prices
have gained more than 90% over the past four weeks.
    Looking forward, analysts expect oil and gas prices will rise as governments slowly lift travel
restrictions, with gas futures for the balance of 2020 and calendar 2021 trading
much higher than the front-month.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 89.5 bcfd so far
in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4 bcfd in
November.
    With the coming of warmer weather, Refinitiv projected demand in the Lower 48 states, including
exports, would rise to 79.8 bcfd next week from an average of 78.2 bcfd this week. That is similar to
Refinitiv's forecasts on Friday.
    Even though the coronavirus is reducing global gas use, the U.S. Energy Information Administration
still expects U.S. exports to hit record highs in coming years as more liquefied natural gas (LNG)
export plants and pipelines enter service. Still, the agency reduced its projections on the pace of that
growth due to the pandemic.
    Refinitiv said U.S. pipeline exports to Canada averaged 2.3 bcfd so far in May, down from 2.4 bcfd
in April and an all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 4.5
bcfd so far this month, down from 4.7 bcfd in April and a record 5.6 bcfd in March.
    Refinitiv said U.S. LNG exports averaged 6.8 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.
    U.S. gas prices for June at the Henry Hub benchmark in Louisiana have mostly traded over the Title
Transfer Facility (TTF) in the Netherlands since late April. As long as U.S. prices remain
over the European benchmark - Henry Hub is also trading over TTF for July and August
 - analysts said LNG buyers would keep canceling U.S. cargoes.
    In April, buyers canceled about 20 U.S. LNG cargoes due to be shipped in June.

    
                                       Week ended      Week ended    Year ago   Five-year   
                                          May 15        May 8         May 15     average    
                                        (Forecast)      (Actual)                  May 15    
 U.S. natgas storage (bcf):                +94            +103         +101        +87      
                                                                                            
                                                                                            
 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                              24             32           44          47           47
 U.S. GFS CDDs                             122            105          107          99           91
 U.S. GFS TDDs                             146            137          151         146          138
                                                                                            
 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              90.1           87.4         87.9        88.5         77.0
 U.S. Imports from Canada                  5.8            6.0          6.0         7.8          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         95.9           93.5         93.9        95.3         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.1            2.1          2.1         2.6          1.9
 U.S. Exports to Mexico                    4.6            4.5          4.6         4.3          3.9
 U.S. LNG Exports                          6.6            6.1          6.7         5.6          2.0
 U.S. Commercial                           7.9            5.3          4.6         5.5          5.5
 U.S. Residential                          10.2           5.4          4.0         5.9          6.1
 U.S. Power Plant                          25.1           26.8         30.1        26.8         25.3
 U.S. Industrial                           22.6           21.6         21.4        21.8         20.6
 U.S. Plant Fuel                           4.5            4.3          4.3         4.3          4.5
 U.S. Pipe Distribution                    1.9            1.7          1.8         1.7          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    72.4           65.4         66.4        66.1         64.0
 Total U.S. Demand                         85.7           78.2         79.8        78.6         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.66           1.60                              
 Transco Z6 New York NG-CG-NY-SNL        1.16           1.05                              
 PG&E Citygate NG-CG-PGE-SNL             2.42           2.43                              
 Dominion South NG-PCN-APP-SNL           1.17           1.01                              
 Chicago Citygate NG-CG-CH-SNL           1.55           1.51                              
 Algonquin Citygate NG-CG-BS-SNL         1.22           1.06                              
 SoCal Citygate NG-SCL-CGT-SNL           1.71           1.64                              
 Waha Hub NG-WAH-WTX-SNL                 1.42           1.41                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             18.25          16.25                              
 PJM West EL-PK-PJMW-SNL                20.25          19.00                              
 Ercot North EL-PK-ERTN-SNL             24.90          21.00                              
 Mid C EL-PK-MIDC-SNL                   13.63          12.50                              
 Palo Verde EL-PK-PLVD-SNL              18.50          13.50                              
 SP-15 EL-PK-SP15-SNL                   18.50          13.00                              
 
 (Reporting by Scott DiSavino; Editing by Dan Grebler and Peter Cooney)
  
 
 
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