March 23, 2020 / 2:55 PM / 10 days ago

U.S. natgas futures hold near 24-year low on forecasts for milder weather

    March 23 (Reuters) - U.S. natural gas futures on Monday held near a 24-year low as forecasts for
milder weather and less demand next week offset a projected increase in gas flowing to liquefied natural
gas (LNG) export terminals and a cooler outlook this week.
    Front-month gas futures for April delivery on the New York Mercantile Exchange fell 0.6 cents,
or 0.4%, to $1.598 per million British thermal units at 10:41 a.m. EDT (1441 GMT), their lowest since
August 1995. The all-time low for gas futures is $1.04 in January 1992.
    In reaction to the collapse in gas futures, speculators last week slashed short positions in NYMEX
futures and options by the most on record. They cut net short position on the NYMEX and
Intercontinental Exchange to their lowest since November, according to Commodity Futures Trading
Commission (CFTC) data on Refinitiv's Eikon going back to 2006.
    Implied volatility for gas futures, meanwhile, has more than doubled since late February as gas and
oil prices plunged over the past few weeks. U.S. crude futures fell to their lowest since 2002.
Oil lost more than half its value since March 5, the day before Saudi Arabia and Russia failed to agree
on a new OPEC+ plan to cut output and instead decided to flood the market with new oil supplies. Those
decisions occurred as government lockdowns and other steps to curb the spread of the coronavirus slowed
global economic growth and demand for energy.
    Looking ahead, the premium of gas futures for November over October NGV20-X20 rose to its highest
since October 2010, while the premium of calendar 2021 over 2022 rose for a record
seventh session in a row on expectations low energy prices should start to boost energy demand later this
year.
    Even before the coronavirus started to spread, gas prices were already trading near their lowest in
years as record production and months of mild weather enabled utilities to leave more gas in storage,
making fuel shortages and price spikes unlikely this winter.
    Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in
the U.S. Lower 48 states, including exports, would slide from an average of 105.4 billion cubic feet per
day (bcfd) this week to 100.1 bcfd next week. That compares with Refinitiv's forecast on Friday of 104.7
bcfd this week and 103.4 bcfd next week.
    The amount of gas expected to flow to U.S. LNG export plants was on track to hold at 9.4 bcfd for a
third day in a row on Monday. That compares with an average of 8.1 bcfd last week and an all-time daily
high of 9.5 bcfd on Jan. 31.
    With the weather turning milder, next-day power prices in New England EL-PK-NPMS-SNL fell to their
lowest since July 2015.
                     
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 20      March 13      March 20     average    
                                        (Forecast)      (Actual)                 March 20    
 U.S. natgas storage (bcf):                -22             -9          -39          -40      
                                                                                             
                                                                                             
 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                             220            240          231          222          233
 U.S. GFS CDDs                              24             29           13          21            16
 U.S. GFS TDDs                             244            269          244          243          249
                                                                                             
 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              94.2           93.9         93.9        90.2          76.9
 U.S. Imports from Canada                  6.8            7.0          6.9          8.4          8.5
 U.S. LNG Imports                          0.0            0.0          0.0          0.0          0.2
 Total U.S. Supply                        101.0          100.9        100.8        98.6          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            2.5          2.6          3.0          2.6
 U.S. Exports to Mexico                    5.6            5.6          5.6          4.8          3.8
 U.S. LNG Exports                          7.8            9.4          9.5          4.0          1.8
 U.S. Commercial                           11.2           11.4         10.1        11.1          12.3
 U.S. Residential                          16.8           17.3         14.8        16.8          19.4
 U.S. Power Plant                          29.9           28.8         27.8        24.7          23.7
 U.S. Industrial                           23.2           23.3         22.9        22.9          22.6
 U.S. Plant Fuel                           4.7            4.6          4.6          4.6          4.7
 U.S. Pipe Distribution                    2.3            2.3          2.2          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    88.3           87.9         82.4        82.5          85.3
 Total U.S. Demand                        104.4          105.4        100.1        94.3          93.5
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.76           1.68                               
 Transco Z6 New York NG-CG-NY-SNL        1.52           1.25                               
 PG&E Citygate NG-CG-PGE-SNL             2.43           2.61                               
 Dominion South NG-PCN-APP-SNL           1.33           1.22                               
 Chicago Citygate NG-CG-CH-SNL           1.55           1.54                               
 Algonquin Citygate NG-CG-BS-SNL         1.61           1.38                               
 SoCal Citygate NG-SCL-CGT-SNL           2.03           2.13                               
 Waha Hub NG-WAH-WTX-SNL                 0.51           1.05                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             15.50          16.50                               
 PJM West EL-PK-PJMW-SNL                22.75          21.50                               
 Ercot North EL-PK-ERTN-SNL             31.75          22.50                               
 Mid C EL-PK-MIDC-SNL                   19.50          25.50                               
 Palo Verde EL-PK-PLVD-SNL              21.00          20.25                               
 SP-15 EL-PK-SP15-SNL                   27.00          27.25                               
 
 (Reporting by Scott DiSavino; Editing by David Gregorio)
  
 
 
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