April 29, 2020 / 12:30 PM / a month ago

U.S. natgas futures ease on mild forecasts, lower demand

    April 29 (Reuters) - U.S. natural gas futures eased on Wednesday on forecasts for milder weather and
lower demand over the next two weeks than previously expected.
    Traders noted gas prices have mostly increased over the past few weeks on slowing output as drillers
shut oil wells in shale basins due to the collapse in crude prices. Those oil wells also produce a lot of
gas. That price increase, however, has been restrained by forecasts government lockdowns to stop the
coronavirus spread will reduce gas demand and exports.
    On its first day as the front-month, gas futures for June delivery fell 1.3 cents, or 0.7%, to
$1.935 per million British thermal units at 8:12 a.m. EDT (1212 GMT). That puts the front-month up about
8% from 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 as the economy snaps back once governments
loosen travel and work restrictions.
    U.S. crude, meanwhile, remained on track to drop for a fourth week in a row, falling about 50%
during that time.
    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 on new drilling.
    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-like 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 around the world, EIA still expects U.S. exports to
hit fresh record highs in coming years as more LNG export plants and pipelines enter service. The agency,
however, has said the pace of that growth will slow from what it had projected before the pandemic.
    Refinitiv said U.S. pipeline exports averaged just 2.4 bcfd to Canada and 4.6 bcfd to Mexico so far
in April. That is down from 2.8 bcfd to Canada and 5.6 bcfd to Mexico in March and all-time monthly highs
of 3.5 bcfd to Canada in December and 5.8 bcfd to Mexico in October.
    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)
  
 
 
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