April 30, 2020 / 3:06 PM / a month ago

UPDATE 2-U.S. natgas futures jump to 10-week high as output slows

 (Adds closing prices)
    April 30 (Reuters) - U.S. natural gas futures rose to a 10-week high on Thursday as output slows
because drillers are shutting oil wells in shale basins due to the recent collapse in crude prices. Those
oil wells also produce a lot of gas.
    That price increase came despite a report showing an expected storage build last week, and forecasts
that government lockdowns to fight the coronavirus will cut domestic demand and exports.
    The U.S. Energy Information Administration (EIA) said utilities injected 70 billion cubic feet (bcf)
of gas into storage during the week ended April 24.
    That was in line with the 69-bcf build analysts estimated in a Reuters poll and compares with an
increase of 114 bcf during the same week last year and a five-year (2015-19) average build of 74 bcf for
the period.
    The increase for the week of April 24 boosted stockpiles to 2.210 trillion cubic feet (tcf), 19.5%
above the five-year average of 1.850 tcf for this time of year.
    Front-month gas futures for June delivery on the New York Mercantile Exchange rose 8.0 cents,
or 4.3%, to settle at $1.949 per million British thermal units, their highest since Feb. 19.
    For the month, the contract gained about 18% after falling around 37% over the prior five months.
That is the biggest increase in a month since November 2018.
    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 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 95.4 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 86.2 bcfd this week to 85.0 bcfd next week. That compares with
Refinitiv's forecasts on Wednesday of 86.3 bcfd this week and 84.6 bcfd next week.
                  
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 17      April 24     average    
                                        24(Actual)      (Actual)                 April 24    
 U.S. natgas storage (bcf):                +70            +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                             111            105          110          97            90
 U.S. GFS CDDs                              57             59           55          57            55
 U.S. GFS TDDs                             168            164          165          154          145
                                                                                             
 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           91.7         91.8        89.6          77.2
 U.S. Imports from Canada                  5.9            5.9          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           97.7         98.4        97.3          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.8          2.8          2.5          2.3
 U.S. Exports to Mexico                    4.6            4.7          4.7          4.6          3.7
 U.S. LNG Exports                          8.1            7.4          8.0          5.2          1.8
 U.S. Commercial                           9.1            7.3          6.8          7.2          8.2
 U.S. Residential                          12.5           9.2          8.4          9.1          11.3
 U.S. Power Plant                          27.0           26.3         25.8        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          1.9          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         69.6        71.8          70.9
 Total U.S. Demand                         93.1           86.2         85.0        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                   1.73           1.80                               
 Transco Z6 New York NG-CG-NY-SNL        1.55           1.69                               
 PG&E Citygate NG-CG-PGE-SNL             2.38           2.52                               
 Dominion South NG-PCN-APP-SNL           1.49           1.60                               
 Chicago Citygate NG-CG-CH-SNL           1.64           1.72                               
 Algonquin Citygate NG-CG-BS-SNL         1.64           1.75                               
 SoCal Citygate NG-SCL-CGT-SNL           1.88           1.87                               
 Waha Hub NG-WAH-WTX-SNL                 1.41           1.49                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             18.75          20.25                               
 PJM West EL-PK-PJMW-SNL                19.15          16.75                               
 Ercot North EL-PK-ERTN-SNL             20.00          21.25                               
 Mid C EL-PK-MIDC-SNL                   12.00          13.71                               
 Palo Verde EL-PK-PLVD-SNL              17.50          23.00                               
 SP-15 EL-PK-SP15-SNL                   13.75          23.75                               
 
 (Reporting by Scott DiSavino; Editing by Steve Orlofsky, Tom Brown and Marguerita Choy)
  
 
 
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