May 1, 2020 / 3:19 PM / a month ago

U.S. natgas futures fall from 10-week high as coronavirus cuts demand, exports

    May 1 (Reuters) - U.S. natural gas futures fell on Friday from a 10-week high on forecasts for
demand and exports to decline due to government lockdowns to stop the spread of coronavirus.
    The decline came despite a continued drop in 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, and U.S. crude futures are
down about 70% since the start of the year.  
    Front-month gas futures for June delivery on the New York Mercantile Exchange fell 2.7 cents,
or 1.4%, to $1.922 per million British thermal units at 10:53 a.m. EDT (1453 GMT). On Thursday, the
front-month closed at its lowest since Feb. 19.
    For the week, however, the contract was up about 10% after falling less than 1% last week.
    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 U.S. Energy Information Administration (EIA) projected gas production will fall to an annual
average of 91.7 billion cubic feet per day 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 average gas output in the U.S. Lower 48 states fell to an eight-month
low of 92.7 bcfd in April, down from 93.2 bcfd in March and an all-time monthly high of 95.4 bcfd in
November.
    The 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 many businesses shut due to the coronavirus and milder spring weather coming, Refinitiv
projected demand in the Lower 48 states, including exports, would drop from an average of 86.4 bcfd this
week to 79.5 bcfd next week before rising to 82.8 bcfd in two weeks. That compares with Refinitiv's
forecasts on Thursday of 86.2 bcfd this week and 85.0 bcfd next week.
    Even though the coronavirus is cutting gas use worldwide, EIA 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 has reduced its projections on the pace of that growth due to the pandemic.
    Refinitiv said average U.S. pipeline exports to Canada fell to a six-month low of 2.4 bcfd in April,
down from 2.8 bcfd in March and an all-time monthly high of 3.5 bcfd in December. Average pipeline
exports to Mexico, meanwhile, fell to an 11-month low of 4.7 bcfd in April, down from a record 5.6 bcfd
in March.
    U.S. LNG exports averaged a four-month low of 8.1 bcfd in April, according to Refinitiv, down from
8.3 bcfd in March and an all-time monthly high of 8.7 bcfd in February.
                  
                                       Week ended      Week ended    Year ago   Five-year   
                                           May 1        Apr 24        May 1      average    
                                        (Forecast)      (Actual)                  May 1     
 U.S. natgas storage (bcf):                +92            +70          +96         +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                             121            111          110          97           87
 U.S. GFS CDDs                              57             57           55          57           56
 U.S. GFS TDDs                             178            168          165         154          143
                                                                                            
 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           91.9         91.4        89.6         77.0
 U.S. Imports from Canada                  5.9            5.9          6.4         7.7          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         98.5           97.8         97.9        97.3         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.8          2.7         2.5          1.9
 U.S. Exports to Mexico                    4.6            4.7          4.7         4.6          3.9
 U.S. LNG Exports                          8.1            7.5          7.8         5.2          2.0
 U.S. Commercial                           9.1            7.3          6.9         7.2          5.5
 U.S. Residential                          12.5           9.2          8.6         9.1          6.1
 U.S. Power Plant                          27.0           26.2         20.3        26.8         25.3
 U.S. Industrial                           22.7           22.2         22.2        22.2         20.6
 U.S. Plant Fuel                           4.6            4.5          4.5         4.5          4.5
 U.S. Pipe Distribution                    2.1            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                    78.0           71.5         64.3        71.8         64.0
 Total U.S. Demand                         93.1           86.4         79.5        84.1         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.73           1.73                              
 Transco Z6 New York NG-CG-NY-SNL        1.55           1.55                              
 PG&E Citygate NG-CG-PGE-SNL             2.38           2.38                              
 Dominion South NG-PCN-APP-SNL           1.49           1.49                              
 Chicago Citygate NG-CG-CH-SNL           1.64           1.64                              
 Algonquin Citygate NG-CG-BS-SNL         1.64           1.64                              
 SoCal Citygate NG-SCL-CGT-SNL           1.88           1.88                              
 Waha Hub NG-WAH-WTX-SNL                 1.41           1.41                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             18.75          18.75                              
 PJM West EL-PK-PJMW-SNL                19.15          19.15                              
 Ercot North EL-PK-ERTN-SNL             20.00          20.00                              
 Mid C EL-PK-MIDC-SNL                   12.00          12.00                              
 Palo Verde EL-PK-PLVD-SNL              17.50          17.50                              
 SP-15 EL-PK-SP15-SNL                   13.75          13.75                              
 
 (Reporting by Scott DiSavino; Editing by Dan Grebler)
  
 
 
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