April 23, 2020 / 3:04 PM / a month ago

UPDATE 2-U.S. natgas futures fall from 9-week high on milder weather forecasts

 (Updates to close)
    April 23 (Reuters) - U.S. natural gas futures fell on Thursday following the release of a report
showing a slightly bigger than expected storage build and forecasts for milder weather and lower heating
demand over the next two weeks.
    The U.S. Energy Information Administration (EIA) said utilities injected 43 billion cubic feet (bcf)
of gas into storage during the week ended April 17.
    That was a little more than the 39-bcf build analysts forecast in a Reuters poll and compares with an
increase of 92 bcf during the same week last year and a five-year (2015-19) average build of 49 bcf for
the period.
    The increase boosted stockpiles to 2.140 trillion cubic feet (tcf), 20.5% above the five-year average
of 1.776 tcf for this time of year.
    After rising to a nine-week high in the prior session, front-month gas futures for May
delivery on the New York Mercantile Exchange fell 12.4 cents, or 6.4%, to settle at $1.815 per million
British thermal units.
    Despite the big daily price drop and expectations demand will decline due to government lockdowns to
slow the spread of the coronavirus, gas futures were still on track to rise for a third week in a row -
up about 13% during that time. That price increase was on expectations production will decline as
drillers shut oil wells in shale basins due to a massive collapse of U.S. crude prices. Analysts have
said that what is bad for oil is good for gas because those oil wells also produce a lot of gas.
    U.S. crude, meanwhile, remained on track to fall for a third week in a row or about 40% during
that time.
    Looking ahead, gas futures for the balance of 2020 and calendar 2021 were trading
even higher than the front-month on expectations demand will jump as the economy snaps back once
governments loosen travel and work restrictions. Calendar 2021 has traded over 2022
for 31 days in a row and over 2025 for 21 days.
    In the long term, the EIA projected the reduction in oil and gas drilling will cut gas production 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. That would be the first annual production decline since 2016 and the first time output
fell for two consecutive years since 2005.
    Those expected declines are showing up in the daily data. Gas output in the Lower 48 states fell to
an 11-week low of 92.1 bcfd on Wednesday from 92.3 bcfd on Tuesday, according to data provider Refinitiv.
    Demand in the Lower 48 states, including exports, is also expected to decline as the weather turns
milder and businesses remain shut for the coronavirus lockdowns, falling from 93.1 bcfd this week to 87.8
bcfd next, according to Refinitiv. That is lower than Wednesday's forecasts of 93.5 bcfd this week and
88.9 bcfd next week.
          
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 10      April 17     average    
                                        17(Actual)      (Actual)                 April 17    
 U.S. natgas storage (bcf):                +43            +73          +92          +49      
                                                                                             
                                                                                             
 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                             124            124          113          120          115
 U.S. GFS CDDs                              59             59           45          46            42
 U.S. GFS TDDs                             173            173          158          166          157
                                                                                             
 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              93.2           92.5         92.6        89.8          77.2
 U.S. Imports from Canada                  6.3            5.9          6.7          7.8          8.1
 U.S. LNG Imports                          0.0            0.0          0.0          0.0          0.1
 Total U.S. Supply                         98.5           98.3         99.3        97.6          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.1            2.4          2.4          2.7          2.3
 U.S. Exports to Mexico                    4.4            4.6          4.9          4.0          3.7
 U.S. LNG Exports                          8.4            8.1          8.1          5.1          1.8
 U.S. Commercial                           10.2           9.0          7.3          6.5          8.2
 U.S. Residential                          14.5           12.4         9.1          7.7          11.3
 U.S. Power Plant                          27.5           27.2         27.2        25.7          21.5
 U.S. Industrial                           23.4           22.6         22.1        21.8          23.0
 U.S. Plant Fuel                           4.6            4.6          4.6          4.6          4.6
 U.S. Pipe Distribution                    2.2            2.1          1.9          2.1          2.2
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    82.6           78.0         72.3        68.5          70.9
 Total U.S. Demand                         97.6           93.1         87.8        80.3          78.7
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.90           1.92                               
 Transco Z6 New York NG-CG-NY-SNL        1.81           1.81                               
 PG&E Citygate NG-CG-PGE-SNL             2.29           2.36                               
 Dominion South NG-PCN-APP-SNL           1.61           1.66                               
 Chicago Citygate NG-CG-CH-SNL           1.88           1.83                               
 Algonquin Citygate NG-CG-BS-SNL         2.05           2.14                               
 SoCal Citygate NG-SCL-CGT-SNL           1.70           1.61                               
 Waha Hub NG-WAH-WTX-SNL                 1.27           0.33                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             22.00          20.00                               
 PJM West EL-PK-PJMW-SNL                20.00          21.00                               
 Ercot North EL-PK-ERTN-SNL             39.00          19.00                               
 Mid C EL-PK-MIDC-SNL                   12.45          15.40                               
 Palo Verde EL-PK-PLVD-SNL              17.75          12.75                               
 SP-15 EL-PK-SP15-SNL                   15.00          13.25                               
 
 (Reporting by Scott DiSavino
Editing by Marguerita Choy)
  
 
 
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