Sept 15 (Reuters) - U.S. natural gas futures jumped over 3% to a fresh seven-year high on Wednesday as
soaring global gas prices kept demand for U.S. exports high and as almost half of gas production in the Gulf
of Mexico remains shut-in from Hurricane Ida damage over two weeks ago.
Traders noted U.S. prices gained despite forecasts for less hot weather and lower demand over the next two
weeks than previously expected.
Much of that expected demand decline came from the shutdown of the Freeport LNG export plant in Texas
during Tropical Storm Nicholas on Tuesday and upcoming planned maintenance at Berkshire Hathaway Energy's Cove
Point LNG export plant in Maryland that could start early next week. Freeport was expected to take on more gas
on Wednesday, which traders said was a sign that the plant was returning to service.
Since Hurricane Ida entered the Gulf of Mexico in late August, gas prices have soared over 35% due to the
slow return of production after Ida, hotter than normal U.S. weather and high air conditioning demand this
summer, record global gas prices and lower than normal gas inventories in the United States and Europe ahead
of the winter heating season, when demand for the fuel peaks.
Front-month gas futures rose 17.6 cents, or 3.4%, to $5.436 per million British thermal units
(mmBtu) at 8:45 a.m. EDT (1245 GMT), putting the contract on track for its highest close since February 2014
for a third day in a row. That also keeps the front-month in overbought territory for a sixth consecutive day.
Soaring gas prices in recent weeks helped cut the premium of oil futures over gas to its lowest since
November 2020. Over the last several years, that premium has prompted U.S. energy firms to focus most of their
drilling activity on finding more oil instead of gas because crude was the more valuable commodity.
The oil-to-gas ratio, or the level at which oil trades compared with gas, fell to 13-to-1. That is below
the 21 times oil has traded over gas so far in 2021 and compares with crude's average premium of 19 times over
gas in 2020 and a five-year average (2015-2019) of 20 times over gas. Crude, however, remains more valuable
than gas. On an energy equivalent basis, oil should trade only six times over gas.
Data provider Refinitiv said gas output in the U.S. Lower 48 states fell to an average of 90.2 billion
cubic feet per day (bcfd) so far in September, from 92.0 bcfd in August, due mostly to Ida-related losses
along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019.
About 1.1 bcfd, or 48%, of gas production in the U.S. Gulf of Mexico remains shut in since Ida, according
to government data.
Refinitiv projected average U.S. gas demand, including exports, would fall from 86.7 bcfd this week to
85.1 bcfd next week as air conditioning use and LNG exports decline. Those forecasts were lower than Refinitiv
expected on Tuesday.
Despite the Freeport outage on Tuesday, the amount of gas flowing to U.S. LNG export plants has averaged
more so far in September at 10.7 bcfd than in August's average of 10.5 bcfd, as buyers around the world keep
purchasing all the super-chilled gas the United States can produce. That compares with a monthly record of
11.5 bcfd in April.
Gas in Europe and Asia was trading near $25 and $19 per mmBtu, respectively, compared
with just over $5 for the U.S. fuel. Gas at the Title Transfer Facility (TTF) in the Netherlands, the European
benchmark, was at a record high.
Week ended Week ended Year ago Five-year
Sep 10 Sep 3 Sep 10 average
(Forecast) (Actual) Sep 10
U.S. weekly natgas storage change (bcf): 67 52 86 79
U.S. total natgas in storage (bcf): 2,990 2,923 3,601 3,237
U.S. total storage versus 5-year average -7.6% -7.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2020 (2016-2020)
Henry Hub 5.41 5.34 2.28 2.13 2.66
Title Transfer Facility (TTF) 24.60 22.87 3.94 3.24 5.19
Japan Korea Marker (JKM) 18.94 18.82 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 22 20 29 36 45
U.S. GFS CDDs 121 130 97 113 102
U.S. GFS TDDs 143 150 126 149 147 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 89.9 91.0 91.4 88.3 82.6
U.S. Imports from Canada 7.0 7.1 7.2 6.2 7.6
U.S. LNG Imports 0.0 0.0 0.0 0.1 0.1
Total U.S. Supply 97.0 98.1 98.6 96.6 90.3 U.S. Demand (bcfd)
U.S. Exports to Canada 2.6 2.5 2.5 2.4 2.3
U.S. Exports to Mexico 5.7 5.7 6.0 5.9 5.0
U.S. LNG Exports 11.0 10.4 9.7 7.5 3.1
U.S. Commercial 4.6 4.7 4.8 5.0 4.8
U.S. Residential 3.7 3.8 4.1 4.3 3.8
U.S. Power Plant 32.3 32.4 30.7 33.5 32.8
U.S. Industrial 20.9 20.9 20.9 21.6 21.1
U.S. Plant Fuel 4.4 4.5 4.5 4.5 4.4
U.S. Pipe Distribution 1.8 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 67.8 68.2 66.9 70.8 68.9
Total U.S. Demand 87.1 86.7 85.1 86.6 79.3 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 5.39 5.21
Transco Z6 New York 5.05 4.94
PG&E Citygate 7.21 7.32
Dominion South 5.00 4.64
Chicago Citygate 5.13 5.11
Algonquin Citygate 5.70 5.01
SoCal Citygate 8.16 7.81
Waha Hub 5.21 4.79 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 75.00 55.75
PJM West 50.75 51.25
Ercot North 60.00 57.50
Mid C 59.46 85.00
Palo Verde 64.00 89.49
SP-15 63.75 73.00
(Reporting by Scott DiSavino; Editing by Steve Orlofsky)
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