September 19, 2018 / 9:06 PM / 3 months ago

U.S. natural gas futures slip 1 percent as investors book profits

(Reuters) - U.S. natural gas futures slipped about 1 percent on Wednesday as investors booked profits a day after prices posted their biggest daily gain since January and on expectations of a higher injection into storage for last week.

After touching the highest level since Aug. 24 at $2.948 per million British thermal units (mmBtu), front-month gas futures for October delivery fell 2.5 cents, or 0.9 percent, to settle at $2.908 mmBtu.

On Tuesday, prices gained over 4 percent, posting their biggest one-day percentage gain since Jan. 23.

“The price fall was probably a technical reaction to the rally in the last few days. ... There was some profit-taking,” said Thomas Saal, senior vice president of energy at INTL FCStone in Miami.

“September is still considered a shoulder month that signifies a relatively weaker demand that also adds to the softness in prices.”

Analysts at Thomson Reuters forecast demand in the Lower 48 states for the forthcoming week at 78.3 billion cubic feet per day (bcfd), lower than the 81.7 bcfd forecast for the current week.

October futures touched their highest premium over November on Wednesday. The contracts have been in backwardation since Sept. 11, according to Reuters data.

On Wednesday, prices fell after rising for the previous two sessions.

“Today’s trade looked like a deserved minor correction following yesterday’s strong gains. Some of the selling may have been profit-taking ahead of tomorrow’s EIA report,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Analysts said utilities likely injected an above-normal 84 billion cubic feet (bcf) of gas into storage during the week ended Sept. 14. [EIA/GAS]

That compared with increases of 96 bcf during the same week last year and a five-year average build of 76 bcf for the period.

If correct, the increase would boost stockpiles to 2.720 trillion cubic feet (tcf), the lowest for the week since 2003. That would be about 18 percent below the five-year average of 3.308 tcf for this time of year.

Traders said overall futures volatility have remained low since February as the market has not been able to decide whether to fall because production is at record levels or rise because the amount of gas in storage is about 18 percent below the five-year (2013-17) average.

Production in the Lower 48 U.S. states has averaged a record high 83.5 bcfd over the past 30 days. On a daily basis, output rose to an all-time high of 84.4 bcfd on Monday, according to Reuters data.

Week ended Week ended Year ago Five-year

Sept. Sept. 7 Sept. 7 average

14(Forecast) (Actual) Sept. 7

U.S. natgas storage (bcf): +84 +69 +96 +76

Thomson Reuters Supply Chain & Commodities Research (SC&CR)

Heating & Cooling Degree Days

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 52 41 33 60 57

U.S. GFS CDDs 104 121 124 86 84

U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Next Week This Week Five-Year

Week Last Year Average

For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 83.7 83.7 83.6 74.7 71.2

U.S. Imports from Canada 7.5 7.7 7.6 8.2 7.8

U.S. LNG Imports 0.0 0.0 0.0 0.1 0.2

Total U.S. Supply 91.2 91.4 91.2 82.2 79.2

U.S. Demand (bcfd)

U.S. Exports to Canada 3.1 2.9 2.9 2.2 2.1

U.S. Exports to Mexico 4.6 4.8 4.8 4.3 3.2

U.S. LNG Exports 3.4 3.2 3.4 2.8 0.5

U.S. Commercial 4.5 4.5 4.7 4.6 4.8

U.S. Residential 3.8 3.8 4.2 4.0 3.8

U.S. Power Plant 30.6 35.3 31.0 30.6 28.0

U.S. Industrial 20.6 21.3 21.5 20.2 19.7

U.S. Plant Fuel 4.1 4.1 4.1 4.1 4.1

U.S. Pipe Distribution 1.6 1.8 1.7 1.6 1.7

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 65.3 70.9 67.3 65.2 62.2

Total U.S. Demand 76.4 81.7 78.3 74.5 68.0

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 3.00 2.95

Transco Z6 New York 3.26 3.09

Dominion South 2.61 2.64

Chicago Citygate 2.97 2.88

Algonquin Citygate 2.95 2.99

SoCal Citygate 4.00 3.90

Waha Hub 1.63 1.75

AECO 0.98 1.15

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 35.25 46.00

PJM West 47.00 48.23

Ercot North 35.00 42.50

Mid C 31.50 33.50

Palo Verde 32.75 36.75

SP-15 35.50 39.25

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Thomson Reuters Supply Chain & Commodities Research (SC&CR), formerly known as Thomson Reuters Analytics cpurl://apps.cp./cms/?pageid=usa-gas

GRAPHIC-Baker Hughes rig count here

U.S. natural gas price & storage polls [NGAS/POLL]

U.S. nuclear power outages [NUKE/]

U.S. Northwest hydropower report

GRAPHIC-U.S. natural gas inventories vs five-year range tmsnrt.rs/2ewaRk2

GRAPHIC-U.S./Canada natural gas rig count vs Henry Hub futures price tmsnrt.rs/2eT9k44

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Reporting by Karen Rodrigues and Harshith Aranya in Bengaluru; editing by Susan Thomas and Jonathan Oatis

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