February 1, 2016 / 1:48 PM / 4 years ago

U.S. natgas futures fall over 5 pct on forecasts for warmer weather

Feb 1 (Reuters) - U.S. natural gas were trading down over 5 percent early Monday on
forecasts for warmer weather over the next two weeks that should reduce heating demand.
    After ending up over 5 percent on Friday, front-month gas futures on the New York Mercantile
Exchange fell 12.1 cents, or 5.27 percent, to $2.177 per million British thermal units at
8:35 a.m. EST (1335 GMT).
    Both the U.S. and European weather models called for warmer than normal weather over the
next two weeks. 
    That warming trend is expected to continue for the rest of the winter with February expected
to be about 9 percent warmer than normal and March expected to be about 19 percent warmer than
normal, according to long range forecasts on Thomson Reuters Analytics.
    U.S. gas speculators boosted their net short positions for a second week in a row as they
bet prices would continue to decline on forecasts for weak heating demand for the rest of the
winter. 
    Heating demand has been about 14 percent warmer than normal so far this winter
(November-March) due to the warming effect of the El Nino weather pattern, but that has not
stopped gas demand from reaching all-time highs.
    That is because the power sector continues to burn record amounts of gas to generate
electricity since the fuel remains relatively cheap compared with coal, which carries higher
environmental and transport costs.
    So far this winter, the power sector has burned on average a record 24.6 billion cubic feet
of gas per day, according to Thomson Reuters Analytics. That compares with 20.8 bcfd during the
extreme cold last winter and the 30-year normal of 18.8 bcfd.
    Traders have said it makes sense for generators to burn gas instead of coal when the gas
premium over coal is less than $1 per mmBtu, as it has been since August and most of the rest of
2015.
                   
                                        Week ended   Week ended   Year    Five-year
                                          Jan. 29     Jan. 22      Ago     Average
                                        (forecast)                        
 U.S. natgas storage (in bcf):             -161         -211      -112       -165
                                                                                    
 Heating & Cooling Degree Days                                                      
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 GFS HDDs                                   399         454        426              
 GFS CDDs                                    2           1          3               
                                                                                    
 EC HDDs                                    378         399        399              
 EC CDDs                                     2           2          3               
                                                                                    
 GFS Gas Consumption                                                                
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 Residential                               25.9         29.3      27.5              
 Commercial                                15.1         16.7      15.7              
 Power                                     24.5         25.6      19.2              
 Industrial                                22.3         22.8      24.1              
 Total                                     87.8         94.5      86.4              
                                                                                    
 EC Gas Consumption                                                                 
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 Residential                               26.2         27.5      27.6              
 Commercial                                15.2         15.8      15.7              
 Power                                     24.5         25.3      19.1              
 Industrial                                22.3         22.5      24.1              
 Total                                     88.2         91.1      86.5              
                                                                                    
 Thomson Reuters Supply Estimates                                                   
 (bcfd):                                                                  
                                        Current Day  Prior Day    Prior   High since
                                                                  Year       2011
 U.S. Lower 48 production                  71.2         71.5      72.9       75.2
 Net U.S. imports from Canada               6.2         5.8        6.2       8.3
 U.S. LNG imports                           0.4         0.3        1.1       2.8
 U.S. LNG exports                                                         
 U.S. exports to Mexico                     3.1         3.4        2.0       4.3
                                                                                    
                                                                                    
 ICE U.S. Natural Gas Next-Day Prices                                               
 ($ per mmBtu):                                                           
 Hub                                    Current Day  Prior Day                      
 Algonquin E-ALGCIT-IDX                               2.36                        
 Dominion South E-DOMSP-IDX                           1.47                        
 New York E-TSCO6NY-IDX                               2.29                        
 Henry Hub GT-HH-IDX                                  2.25                        
 Chicago MC-CHICIT-IDX                                2.29                        
 SoCal Border W-SOBOR-IDX                             2.30                        
                                                                                    
 ICE U.S. Power Next-Day Prices                                                     
 ($ per megawatt-hour):                                                   
 Hub                                    Current Day  Prior Day                      
 Ercot North SE-ERCONP-IDX                           18.84                        
 Mid C W-MIDCP-IDX                                   20.64                        
 New England E-NEPLMHP-IDX                           27.96                        
 Palo Verde W-PVP-IDX                                22.08                        
 PJM West E-PJWHRTP-IX                               25.31                        
 SP-15 W-SP15-IDX                                    28.73                        
 
 (Reporting by Scott DiSavino)
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