S&P GSCI NATURAL GAS INDEX
July 27 (Reuters) - U.S. natural gas futures dropped about 5% to a one-week low on forecasts for less demand and less hot
weather over the next two weeks than previously expected.
That price drop came despite a slightly smaller-than-expected storage build last week when hotter-than-normal weather boosted
the amount of gas power generators burned to produce power to keep air conditioners humming.
In the spot market, meanwhile, power and gas prices in some markets rose to their highest in months as homes and businesses
continued to crank up their air conditioners to escape a lingering heat wave blanketing much of the country this week. That extreme
heat is boosting power demand to near-record levels and stressing electric grids across the country.
The U.S. Energy Information Administration (EIA) said utilities added 16 billion cubic feet (bcf) of gas into storage during the
week ended July 21.
That is a slightly less than the 19-bcf build analysts forecast in a Reuters poll and compares with an increase of 18 bcf in the
same week last year and a five-year (2018-2022) average increase of 31 bcf.
Last week's increase boosted stockpiles to 2.87 trillion cubic feet (tcf), or 13.1% above the five-year average of 2.642 tcf for
the time of year.
On its next to last day as the front-month, gas futures for August delivery on the New York Mercantile Exchange fell 12.6
cents, or 4.7%, to $2.539 per million British thermal units (mmBtu) at 10:41 a.m. EDT (1441 GMT), putting the contract on track for
its lowest close since July 17.
Futures for September, which will soon be the front-month, were down about 10 cents to $2.60 per mmBtu.
The premium of futures for September over August were on track to hit a record high for a second day in a row on
Thursday. That is a big change from where the spread usually trades. Over the past four years, September has traded at a premium to
August on just 14 occasions - all of them in June and July of 2023.
In the spot market, next-day power prices for Thursday soared to their highest since December 2022 at the Palo Verde hub
in Arizona and their highest since February 2023 at the PJM Western Hub , which covers an area from
northwestern Pennsylvania to Washington, D.C.
Next-day gas for Thursday at the Southern California Border nearly doubled to $12.55 per mmBtu, their highest
since March 2023.
SUPPLY AND DEMAND
Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.5 billion cubic feet per day (bcfd) so far
in July, up from 101.0 bcfd in June. That compares with a monthly record of 101.8 bcfd in May.
Even though the weather will be less hot over the next two weeks than previously expected, meteorologists forecast the weather in
the Lower 48 states will remain hotter than normal through at least Aug. 11.
Refinitiv forecast U.S. gas demand, including exports, would rise from 104.7 bcfd this week to 105.7 bcfd next week. Those
forecasts were lower than Refinitiv's outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 12.7 bcfd so far in July from 11.6 bcfd in June. That is
still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities.
On a daily basis, however, LNG feedgas fell to a preliminary two-week low of 12.2 bcfd due to recent reductions at Cheniere
Energy's Sabine Pass in Louisiana and the shutdown of the Columbia pipeline to Berkshire Hathaway Energy's Cove Point in
Maryland.
The amount of gas flowing to Cove Point was on track to reach 0.6 bcfd on Thursday, the same as Wednesday, after dropping to 0.5
bcfd on Tuesday due to the Columbia pipe fire. That compares with feedgas of around 0.8 bcfd since November.
Week ended Week ended Year ago Five-year
Jul 21 Jul 14 Jul 21 average
Forecast Actual Jul 21
U.S. weekly natgas storage change (bcf): 16 41 18 31
U.S. total natgas in storage (bcf): 2,987 2,971 2,414 2,642
U.S. total storage versus 5-year average 13.1% 13.8%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2022 (2017-2021)
Henry Hub 2.63 2.67 7.19 6.54 2.89
Title Transfer Facility (TTF) 9.39 9.58 51.76 40.50 7.49
Japan Korea Marker (JKM) 11.10 11.46 39.36 34.11 8.95
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 3 3 1 2 3
U.S. GFS CDDs 239 243 245 211 201
U.S. GFS TDDs 242 246 246 213 204
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 101.2 101.2 101.2 98.0 90.5
U.S. Imports from Canada 7.4 7.6 7.6 9.1 8.2
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 108.6 108.8 108.8 107.1 98.8
U.S. Demand (bcfd)
U.S. Exports to Canada 1.7 1.6 1.6 2.5 2.4
U.S. Exports to Mexico 6.6 6.1 6.7 5.7 5.5
U.S. LNG Exports 12.7 12.7 12.7 10.6 6.1
U.S. Commercial 4.3 4.4 4.4 4.4 4.5
U.S. Residential 3.5 3.5 3.6 3.5 3.6
U.S. Power Plant 48.0 47.7 48.0 43.7 41.7
U.S. Industrial 21.3 21.4 21.4 21.3 21.1
U.S. Plant Fuel 5.0 5.0 5.0 5.0 5.0
U.S. Pipe Distribution 2.2 2.2 2.3 2.3 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 84.6 84.3 84.7 80.3 78.2
Total U.S. Demand 105.6 104.7 105.7 99.1 92.2
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2022 2021 2020
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 83 83 107 81 103
Jan-Jul 77 77 102 79 98
Oct-Sep 75 75 103 81 95
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jul 28 Jul 21 Jul 14 Jul 7 Jun 30
Wind 6 7 7 6 10
Solar 4 4 4 4 4
Hydro 6 6 6 6 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 45 46 45 45 43
Coal 20 19 19 19 18
Nuclear 17 17 17 18 17
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 2.60 2.66
Transco Z6 New York 2.09 1.99
PG&E Citygate 5.32 5.43
Eastern Gas (old Dominion South) 1.47 1.65
Chicago Citygate 2.46 2.39
Algonquin Citygate 6.30 4.60
SoCal Citygate 12.55 6.65
Waha Hub 2.32 2.30
AECO 1.75 1.73
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 98.75 58.00
PJM West 142.75 51.50
Ercot North 56.00 40.75
Mid C 89.00 104.20
Palo Verde 231.00 126.00
SP-15 76.00 76.75
(Reporting by Scott DiSavino; editing by Jonathan Oatis)
US natgas prices drop 5% to one-week low on forecasts for less hot weather
July 27, 2023 at 10:31 am EDT
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