May 13, 2020 / 12:56 PM / 18 days ago

U.S. natgas futures edge up as output slow

    May 13 (Reuters) - U.S. natural gas futures edged higher on
Wednesday on expectations output will slow as a collapse in oil
prices due to the COVID-19 pandemic prompted energy firms to
shut oil wells and slash spending on new drilling. Those oil
wells also produce a lot of gas.
    That small increase came despite forecasts for domestic
demand and exports to decline as businesses remain closed due to
government lockdowns to stop the spread of the novel
coronavirus.
    Front-month gas futures for June delivery on the New
York Mercantile Exchange rose 1.5 cents, 0.9%, to $1.735 per
million British thermal units at 8:32 a.m. EDT (1232 GMT). 
    Since late April, the front-month at the Henry Hub benchmark
in Louisiana has traded higher than the Title Transfer Facility
(TTF) in the Netherlands. Henry Hub
futures were also trading higher than TTF in July
 and August.
    Analysts said higher U.S. prices should prompt buyers of
liquefied natural gas to cancel more U.S. cargoes in coming
months. In April, buyers canceled about 20 U.S. cargoes due to
be shipped in June.
    Looking ahead, U.S. gas futures for the balance of 2020
 and calendar 2021 were trading higher than
the front-month on expectations demand will increase once
governments loosen coronavirus travel and work restrictions.
    The U.S. Energy Information Administration projected gas
production will fall to an annual average of 89.8 billion cubic
feet per day (bcfd) in 2020 and 84.9 bcfd in 2021 from a record
92.2 bcfd in 2019 due to the reduction in drilling.
    Data provider Refinitiv said average gas output in the U.S.
Lower 48 states has fallen to 90.2 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.
    EIA projected coronavirus lockdowns will cut U.S. gas use -
not including exports - to an average of 81.7 bcfd in 2020 and
79.2 bcfd in 2021 from a record 85.0 bcfd in 2019.
    With the weather expected to turn milder, Refinitiv
projected demand in the Lower 48 states, including exports, will
fall from an average of 85.7 bcfd this week to 78.8 bcfd next
week. That is similar to Refinitiv's forecasts on Tuesday.
    Even though the coronavirus is reducing global gas use, the
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.
    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, meanwhile, 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 7.2 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.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                           May 8        May 1         May 8      average    
                                         (Actual)       (Actual)                  May 8     
 U.S. natgas storage (bcf):                +102           +109         +100        +85      
                                                                                            
                                                                                            
 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                              40             47           75          63           58
 U.S. GFS CDDs                             103            101           78          82           80
 U.S. GFS TDDs                             143            148          153         145          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              90.2           90.2         89.8        89.0         77.0
 U.S. Imports from Canada                  5.9            5.9          6.1         7.6          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         96.1           96.1         95.9        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.5            2.1          2.1         2.6          1.9
 U.S. Exports to Mexico                    4.5            4.6          4.6         4.6          3.9
 U.S. LNG Exports                          7.3            6.7          6.6         5.8          2.0
 U.S. Commercial                           6.6            7.9          5.3         6.4          5.5
 U.S. Residential                          7.9            10.3         5.5         7.5          6.1
 U.S. Power Plant                          25.8           24.9         26.7        25.8         25.3
 U.S. Industrial                           22.1           22.6         21.6        22.0         20.6
 U.S. Plant Fuel                           4.5            4.5          4.4         4.5          4.5
 U.S. Pipe Distribution                    1.8            1.9          1.7         1.9          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    68.9           72.3         65.5        68.2         64.0
 Total U.S. Demand                         83.2           85.7         78.8        81.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.61           1.70                              
 Transco Z6 New York NG-CG-NY-SNL        1.43           1.47                              
 PG&E Citygate NG-CG-PGE-SNL             2.60           2.61                              
 Dominion South NG-PCN-APP-SNL           1.35           1.39                              
 Chicago Citygate NG-CG-CH-SNL           1.63           1.74                              
 Algonquin Citygate NG-CG-BS-SNL         1.47           1.56                              
 SoCal Citygate NG-SCL-CGT-SNL           1.84           1.98                              
 Waha Hub NG-WAH-WTX-SNL                 1.50           1.48                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             15.25          15.50                              
 PJM West EL-PK-PJMW-SNL                19.00          20.00                              
 Ercot North EL-PK-ERTN-SNL             19.25          19.00                              
 Mid C EL-PK-MIDC-SNL                    7.67          12.08                              
 Palo Verde EL-PK-PLVD-SNL               2.75           2.75                              
 SP-15 EL-PK-SP15-SNL                   10.75          14.00                              
 
 (Reporting by Scott DiSavino)
  
 
 
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