April 24, 2020 / 7:55 PM / a month ago

UPDATE 1-U.S. natgas futures slide on mild weather outlook, demand loss

 (Updates with settlement prices)
    April 24 (Reuters) - U.S. natural gas futures dropped as much as 5.5% on Friday on forecasts of
milder weather, and as shutdowns to prevent the spread of the coronavirus led to dwindling fuel demand
and rising stockpiles.
    Front-month gas futures for May delivery on the New York Mercantile Exchange fell 6.9 cents,
or 3.8%, to settle at $1.746 per million British thermal units.
    "We're just seeing prices consolidate after the recent gains and look for a direction. There are
still risks to demand in the short term that are preventing the stronger rally towards $2," said Daniel
Myers, market analyst at Gelber & Associates in Houston.
    "The weather is mild right now, and there's risk that LNG export cargoes will be reduced in the
coming months over the summer. So, short term reduced demand from the coronavirus shut-ins keeping a lid
on price, but longer term the market is expecting a recovery due to reduced production." 
    Demand in the Lower 48 states, including exports, meanwhile, is expected to decline as the weather
turns milder, falling from 88.1 bcfd this week to 87 bcfd next, according to Refinitiv.    
    For the week, prices registered their first fall in three, on expectations demand will decline due to
government lockdowns to slow the spread of the coronavirus.
    On Wednesday, prices closed at their highest level in nine-weeks on expectations production will
decline as drillers shut oil wells in shale basins due to a massive collapse of U.S. crude prices.
Analysts have said that what is bad for oil is good for gas because those oil wells also produce a lot of
gas.
    Gas output in the Lower 48 states fell to an more than 11-week low of 91.7 bcfd on Thursday from 92.1
bcfd on Wednesday, according to data provider Refinitiv.
    The U.S. Energy Information Administration (EIA) said utilities injected 43 billion cubic feet (bcf)
of gas into storage during the week ended April 17. The increase boosted stockpiles to 2.140 trillion
cubic feet (tcf), 20.5% above the five-year average of 1.776 tcf for this time of year.
    Looking ahead, gas futures for the balance of 2020 and calendar 2021 were trading
even higher than the front-month on expectations demand will jump as the economy snaps back once
governments loosen travel and work restrictions.
    In the long-term, the EIA projected the reduction in drilling will cut gas production to an annual
average of 91.7 billion cubic feet per day (bcfd) in 2020 and 87.5 bcfd in 2021 from a record 92.2 bcfd
in 2019. That would be the first annual production decline since 2016 and the first time output fell for
two consecutive years since 2005.
       
          
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 17      April 24     average    
                                       24(Forecast)     (Actual)                 April 24    
 U.S. natgas storage (bcf):                +53            +43          +114         +74      
                                                                                             
                                                                                             
 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                             117            124          104          105          108
 U.S. GFS CDDs                              61             59           54          52            45
 U.S. GFS TDDs                             178            183          158          157          153
                                                                                             
 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              92.6           92.3         92.5        89.8          77.2
 U.S. Imports from Canada                  5.9            6.6          6.7          7.8          8.1
 U.S. LNG Imports                          0.0            0.0          0.0          0.0          0.1
 Total U.S. Supply                         98.5           98.9         99.3        97.6          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.6          2.5          2.7          2.3
 U.S. Exports to Mexico                    4.6            4.9          4.9          4.0          3.7
 U.S. LNG Exports                          8.1            8.1          8.8          5.1          1.8
 U.S. Commercial                           9.0            7.4          7.0          6.5          8.2
 U.S. Residential                          12.4           9.3          8.7          7.7          11.3
 U.S. Power Plant                          27.1           27.1         26.4        25.7          21.5
 U.S. Industrial                           22.7           22.1         22.0        21.8          23.0
 U.S. Plant Fuel                           4.6            4.6          4.6          4.6          4.6
 U.S. Pipe Distribution                    2.1            1.9          1.9          2.1          2.2
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    78.0           72.6         70.8        68.5          70.9
 Total U.S. Demand                         93.1           88.1         87.0        80.3          78.7
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.86           1.90                               
 Transco Z6 New York NG-CG-NY-SNL        1.79           1.81                               
 PG&E Citygate NG-CG-PGE-SNL             2.34           2.29                               
 Dominion South NG-PCN-APP-SNL           1.67           1.61                               
 Chicago Citygate NG-CG-CH-SNL           1.83           1.88                               
 Algonquin Citygate NG-CG-BS-SNL         1.97           2.05                               
 SoCal Citygate NG-SCL-CGT-SNL           1.80           1.70                               
 Waha Hub NG-WAH-WTX-SNL                 1.22           1.27                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             22.50          22.00                               
 PJM West EL-PK-PJMW-SNL                21.25          20.00                               
 Ercot North EL-PK-ERTN-SNL             23.00          39.00                               
 Mid C EL-PK-MIDC-SNL                   17.48          12.45                               
 Palo Verde EL-PK-PLVD-SNL              21.00          17.75                               
 SP-15 EL-PK-SP15-SNL                   21.75          15.00                               
          

 (Reporting by Sumita Layek in Bengaluru; 
Editing by Marguerita Choy and Andrea Ricci)
  
 
 
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