Sept 9 (Reuters) - U.S. natural gas futures eased on Thursday on forecasts for less hot weather and lower
demand over the next two weeks than previously expected as the market takes a break after soaring to a
seven-year high in the prior session.
Since Hurricane Ida started targeting the U.S. Gulf Coast in late August, gas futures have gained over 20%
due mostly to the slow return of production in the Gulf of Mexico and continued hot weather across much of the
country. That heat has been especially extreme in the U.s. West where another heat wave is baking California.
Traders also noted the lack of big price moves so far on Thursday came as the market waits for direction
from a federal report expected to show last week's hot weather and low storm-related output resulted in a much
smaller than usual inventory build. U.S. stockpiles, which utilities use to meet peak demand for heat during
the winter months, were already more than 7% below normal for this time of year.
Analysts forecast U.S. utilities added 40 billion cubic feet (bcf) of gas into storage during the week
ended Sept. 3. That compares with an increase of 65 bcf in the same week last year and a five-year (2016-2020)
average increase of 65 bcf.
If correct, last week's injection would boost stockpiles to 2.911 trillion cubic feet (tcf), which would
be 7.8% below the five-year average of 3.158 tcf for this time of year.
Front-month gas futures were down 2.3 cents, or 0.5%, to $4.891 per million British thermal units
(mmBtu) at 9:53 a.m. EDT (1353 GMT). On Wednesday, the contract soared almost 8% to close at its highest since
February 2014.
In the power market, prices for Thursday topped $300 per megawatt hour (MWh) at the Mid Columbia (Mid C)
hub in Washington State and at Palo Verde in Arizona, and over $200 at South Path 15 (SP-15) in Southern
California as consumers crank up their air conditioners to escape another heat wave. Those are the highest
prices for Mid C since July, Palo Verde since June and SP-15 since February.
The California Independent System Operator (ISO), which operates the power grid for most of California,
declared a flex alert for Wednesday and Thursday evenings, urging consumers to conserve energy when solar
power stops working as the sun goes down and the drought-parched grid becomes more reliant on gas-fired
generators and imports from other states that are also suffering from the heat wave.
In the next-day gas market, meanwhile, prices at several hubs rose to their highest since the February
freeze struck Texas, including the PG&E and Southern California citygates in
California, Dominion South in southwestern Pennsylvania and New York .
Data provider Refinitiv said gas output in the U.S. Lower 48 states fell from an average of 92.0 billion
cubic feet per day (bcfd) in August to 89.6 bcfd so far in September with most of the losses in the Gulf Coast
area. That compares with an all-time monthly high of 95.4 bcfd in November 2019.
Refinitiv projected average U.S. gas demand, including exports, would hold near 86.9 bdfd this week and
next. The forecast for next week was lower than Refinitiv projected on Wednesday as a cooler outlook will
cause power generators to burn less gas to keep air conditioners humming.
The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants rose from an average of 10.5
bcfd in August to 10.7 bcfd so far in September as buyers around the world buy all the super-chilled gas the
United States can produce. That compares with a record 11.5 bcfd in April.
Gas in Europe and Asia was trading around $19 per mmBtu, compared with near $5 for
the U.S. fuel. That put gas prices at the Title Transfer Facility (TTF) in the Netherlands, the European
benchmark, at a record high.
Week ended Week ended Year ago Five-year
Sep 3 Aug 27 Sep 3 average
(Forecast) (Actual) Sep 3
U.S. weekly natgas storage change (bcf): 40 20 65 65
U.S. total natgas in storage (bcf): 2,911 2,871 3,515 3,158
U.S. total storage versus 5-year average -7.8% -7.2% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2020 (2016-2020)
Henry Hub 4.96 5.01 2.28 2.13 2.66
Title Transfer Facility (TTF) 19.24 19.21 3.94 3.24 5.19
Japan Korea Marker (JKM) 18.65 18.69 4.63 4.22 6.49 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 17 13 37 29 32
U.S. GFS CDDs 142 150 103 135 119
U.S. GFS TDDs 159 163 140 164 151 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 89.5 89.8 90.2 90.2 82.6
U.S. Imports from Canada 7.0 7.0 7.1 6.5 7.6
U.S. LNG Imports 0.0 0.0 0.0 0.1 0.1
Total U.S. Supply 96.5 96.8 97.3 96.8 90.3 U.S. Demand (bcfd)
U.S. Exports to Canada 2.4 2.6 2.6 2.1 2.3
U.S. Exports to Mexico 6.3 5.8 6.1 6.0 5.0
U.S. LNG Exports 10.5 10.9 10.5 5.5 3.1
U.S. Commercial 4.5 4.6 4.7 4.8 4.8
U.S. Residential 3.6 3.6 3.8 4.0 3.8
U.S. Power Plant 37.1 32.1 31.6 33.8 32.8
U.S. Industrial 21.0 20.9 21.0 21.6 21.1
U.S. Plant Fuel 4.4 4.4 4.5 4.4 4.4
U.S. Pipe Distribution 1.9 1.8 1.8 1.8 1.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 72.8 67.6 67.5 70.5 68.9
Total U.S. Demand 92.0 87.0 86.8 84.1 79.3 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 4.66 4.71
Transco Z6 New York 4.37 4.05
PG&E Citygate 6.64 6.12
Dominion South 4.17 3.90
Chicago Citygate 4.78 4.49
Algonquin Citygate 4.50 4.21
SoCal Citygate 19.75 12.29
Waha Hub 4.73 4.55 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 47.50 49.75
PJM West 44.50 35.50
Ercot North 50.00 54.50
Mid C 300.00 121.67
Palo Verde 312.00 138.00
SP-15 235.00 109.00
(Reporting by Scott DiSavino; editing by Jonathan Oatis)
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