US natgas prices ease to 6-week low on rising output, lower LNG feedgas
By Scott DiSavino
July 2 (Reuters) -U.S. natural gas futures eased about 1% to a six-week low on rising output, forecasts for less demand over the next two weeks than previously expected due to lower liquefied natural gas (LNG) feedgas and an ongoing oversupply of gas in storage.
Front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange fell 2.4 cents, or 1.0%, to $2.454 per million British thermal units (mmBtu) at 8:49 a.m. EDT (1249 GMT), putting the contract on track for its lowest close since May 15 for a second day in a row.
In other news, a federal judge dealt U.S. President Joe Biden's climate agenda a setback by blocking the Democrat's administration from continuing to pause the approval of applications to export liquefied natural gas (LNG).
In Texas, the Electric Reliability Council of Texas (ERCOT), power grid operator for most of the state, said peak demand this week will come close to but not break the record for the month of July as homes and businesses crank up their air conditioners to escape a heat wave.
In the spot market, next-day gas prices at the Waha hub NG-WAH-WTX-SNL in West Texas plunged by about 123% to a negative 52 cents per mmBtu for Tuesday as pipeline constraints trap gas in the Permian Shale again.
That is the third time in six days Waha prices fell into negative territory during the current heat wave and the 20th time so far this year. Next-day Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six in 2020, none in 2021 and 2022, and once in 2023.
In the Caribbean Sea, Hurricane Beryl, an extremely dangerous major hurricane, will hit Jamaica on Wednesday before slamming slam into Mexico's Yucatan Peninsula on Friday, according to the latest U.S. National Hurricane Center (NHC) outlook.
After marching across the Yucatan, the NHC projected Beryl will weaken into a tropical storm by the time it enters the Bay of Campeche in the Gulf of Mexico, where Mexico produces much of its oil, on Saturday before approaching the Texas-Mexico border on Sunday.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 101.5 billion cubic feet per day (bcfd) so far in July.
That was up from an average of 100.1 bcfd in June and a 17-month low of 99.5 bcfd in May as many producers reduced drilling activities after prices fell to 3-1/2-year lows in February and March. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 17.
With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 98.5 bcfd this week to 104.5 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.
Gas flows to the seven big U.S. LNG export plants fell to 12.2 bcfd so far in July, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
That decline was due mostly to an expected drop in feedgas at Cheniere Energy's LNG.N 4.5-bcfd Sabine Pass in Louisiana to a one-week low of 3.7 bcfd on Tuesday, down from 4.1 bcfd on Monday and an average of 4.0 bcfd over the prior seven days.
Week ended June 28 Forecast | Week ended June 21 Actual | Year ago June 28 | Five-year average June 28 | ||
U.S. weekly natgas storage change (bcf): | +41 | +52 | +76 | +69 | |
U.S. total natgas in storage (bcf): | 3,138 | 3,097 | 2,859 | 2,638 | |
U.S. total storage versus 5-year average | 19.0% | 20.6% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 2.46 | 2.48 | 2.64 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 10.44 | 10.53 | 9.58 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 12.54 | 12.64 | 11.44 | 14.39 | 14.31 |
LSEG Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days | |||||
Two-Week Total Forecast | Current Day | Prior Day | Prior Year | 10-Year Norm | 30-Year Norm |
U.S. GFS HDDs | 2 | 2 | 8 | 8 | 4 |
U.S. GFS CDDs | 254 | 256 | 168 | 175 | 197 |
U.S. GFS TDDs | 256 | 258 | 176 | 183 | 201 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2019-2023) Average For Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 99.6 | 101.6 | 101.5 | 103.3 | 95.5 |
U.S. Imports from Canada | 7.8 | 7.9 | 7.5 | N/A | 7.8 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
Total U.S. Supply | 107.5 | 109.5 | 109.1 | N/A | 112.5 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.8 | 1.8 | 1.7 | N/A | 2.3 |
U.S. Exports to Mexico | 6.7 | 6.6 | 6.9 | N/A | 6.1 |
U.S. LNG Exports | 12.3 | 12.4 | 12.5 | 13.0 | 8.6 |
U.S. Commercial | 4.4 | 4.3 | 4.3 | 4.3 | 4.5 |
U.S. Residential | 3.7 | 3.5 | 3.5 | 3.4 | 3.6 |
U.S. Power Plant | 45.3 | 41.2 | 46.5 | 44.9 | 43.3 |
U.S. Industrial | 21.7 | 21.6 | 21.6 | 21.2 | 21.3 |
U.S. Plant Fuel | 4.9 | 5.0 | 5.0 | 4.9 | 4.9 |
U.S. Pipe Distribution | 2.2 | 2.1 | 2.2 | 2.2 | 2.2 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 82.3 | 77.8 | 83.3 | 81.0 | 79.9 |
Total U.S. Demand | 103.1 | 98.5 | 104.5 | N/A | 96.9 |
N/A is Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam | Current Day % of Normal Forecast | Prior Day % of Normal Forecast | 2023 % of Normal Actual | 2022 % of Normal Actual | 2021 % of Normal Actual |
Apr-Sep | 75 | 75 | 83 | 107 | 81 |
Jan-Jul | 76 | 76 | 77 | 102 | 79 |
Oct-Sep | 78 | 78 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Jul 5 | Week ended Jun 28 | Week ended Jun 21 | Week ended Jun 14 | Week ended Jun 7 | |
Wind | 11 | 9 | 12 | 9 | 11 |
Solar | 6 | 5 | 6 | 6 | 6 |
Hydro | 5 | 5 | 6 | 7 | 7 |
Other | 1 | 1 | 1 | 1 | 1 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 41 | 43 | 40 | 41 | 41 |
Coal | 18 | 19 | 18 | 16 | 15 |
Nuclear | 18 | 17 | 17 | 19 | 19 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 2.21 | 2.42 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.59 | 1.46 | |||
PG&E Citygate NG-CG-PGE-SNL | 3.45 | 3.15 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.58 | 1.40 | |||
Chicago Citygate NG-CG-CH-SNL | 1.73 | 1.91 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.63 | 1.52 | |||
SoCal Citygate NG-SCL-CGT-SNL | 2.40 | 2.38 | |||
Waha Hub NG-WAH-WTX-SNL | -0.52 | 2.25 | |||
AECO NG-ASH-ALB-SNL | 0.53 | 0.51 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 31.75 | 28.50 | |||
PJM West EL-PK-PJMW-SNL | 35.75 | 38.25 | |||
Ercot North EL-PK-ERTN-SNL | 26.00 | 33.25 | |||
Mid C EL-PK-MIDC-SNL | 34.33 | 39.21 | |||
Palo Verde EL-PK-PLVD-SNL | 24.50 | 30.25 | |||
SP-15 EL-PK-SP15-SNL | 24.50 | 29.50 |
Reporting by Scott DiSavino; editing by Barbara Lewis
For gas data on LSEG's Eikon type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.
For Interactive Map, type 'Interactive Map' in the box at upper left of the Eikon terminal
For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html
For next-day SNL U.S. gas prices, see: 0#SNL-NG
For next-day SNL U.S. power prices, see: 0#SNL-PWR
For U.S. natgas price and storage polls, see: NGAS/POLL
For U.S. nuclear power outages, see: NUKE/
For U.S. Northwest hydro power report, see: NWRFC
For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44
For the U.S. natural gas speed guide, see: USGAS
For the U.S. power speed guide, see: USPOWER
To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)
NYMEX Henry Hub options and futures combined 0#3CFTC023651
NYMEX Henry Hub futures only 0#1CFTC023651
ICE Henry Hub options and futures combined 0#3CFTC023391
NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B
NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C
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