March 9, 2020 / 1:16 PM / 21 days ago

UPDATE 3-U.S. natgas jumps 4% with oil price drop expected to cut gas output

 (Adds quote, latest prices)
    March 9 (Reuters) - U.S. natural gas futures jumped over 4%
on Monday on forecasts for colder weather and higher heating
demand next week than previously expected and expectations the
collapse in oil prices would prompt drillers to cut back on oil
and gas production.
    Earlier in the day, gas prices dropped to their lowest in
over 21 years as they followed the collapse in oil prices. But
by midday, some analysts noted plunging oil prices could help
gas prices by reducing associated gas production.
    U.S. oil futures fell as much as 34% in their biggest daily
rout since the 1991 Gulf War after Saudi Arabia signaled it
would hike output to win market share even though the
coronavirus has already left the market oversupplied.
    Even before crude futures collapsed, gas prices over
the past week had been trading within a nickel of their lowest
since August 1998 as record production and mild weather enabled
utilities to leave more gas in storage this winter, making fuel
shortages and prices spikes unlikely.
    Much of the growth in gas output was coming from gas
associated with the production of oil in shale basins like the
Permian in West Texas. Since drillers were seeking oil, that
production was insensitive to low gas prices.
    "A large enough decrease in (oil production in) the Permian
could support natural gas prices as a whole," Daniel Myers,
market analyst at Gelber & Associates in Houston, said in a
report.
    Front-month gas futures for April delivery on the New
York Mercantile Exchange rose 7.0 cents, or 4.1%, to settle at
$1.778 per million British thermal units (mmBtu).
    Earlier in the session, gas slid to $1.61 per mmBtu, its
lowest since August 1998. If prices drop below that level, they
would fall to their lowest since September 1995.
    Refinitiv, a data provider, projected average demand in the
U.S. Lower 48 states, including exports, would rise from 100.7
billion cubic feet per day (bcfd) this week to 107.5 bcfd next
week. That compares with Refinitiv's forecast on Friday of 104.4
bcfd this week and 99.6 bcfd next week.
    
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 6        Feb. 28      March 6      average    
                                        (Forecast)      (Actual)                  March 6    
 U.S. natgas storage (bcf):                -63            -109         -164         -99      
                                                                                             
                                                                                             
 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                             257            231          293          280          291
 U.S. GFS CDDs                              14             16           10          14            10
 U.S. GFS TDDs                             271            247          370          294          301
                                                                                             
 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              93.9           93.7         93.7        88.5          76.9
 U.S. Imports from Canada                  7.1            6.8          7.3          8.6          8.5
 U.S. LNG Imports                          0.1            0.1          0.0          0.1          0.2
 Total U.S. Supply                        101.2          100.5        101.0        97.2          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            3.0          2.9          3.1          2.6
 U.S. Exports to Mexico                    5.6            5.5          5.6          4.8          3.8
 U.S. LNG Exports                          8.1            7.7          8.2          5.1          1.8
 U.S. Commercial                           13.2           10.8         12.6        13.4          12.3
 U.S. Residential                          20.5           16.1         19.4        21.7          19.4
 U.S. Power Plant                          28.7           27.5         27.8        25.1          23.7
 U.S. Industrial                           23.8           23.0         23.8        23.4          22.6
 U.S. Plant Fuel                           4.6            4.6          4.6          4.6          4.7
 U.S. Pipe Distribution                    2.5            2.2          2.4          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    93.4           84.5         90.9        90.6          85.3
 Total U.S. Demand                        109.9          100.7        107.5        103.6         93.5
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.76           1.89                               
 Transco Z6 New York NG-CG-NY-SNL        1.54           1.67                               
 PG&E Citygate NG-CG-PGE-SNL             2.64           2.64                               
 Dominion South NG-PCN-APP-SNL           1.52           1.56                               
 Chicago Citygate NG-CG-CH-SNL           1.52           1.64                               
 Algonquin Citygate NG-CG-BS-SNL         1.62           1.75                               
 SoCal Citygate NG-SCL-CGT-SNL           1.90           2.10                               
 Waha Hub NG-WAH-WTX-SNL                 0.25           0.34                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             19.25          21.00                               
 PJM West EL-PK-PJMW-SNL                19.50          20.25                               
 Ercot North EL-PK-ERTN-SNL             15.25          17.50                               
 Mid C EL-PK-MIDC-SNL                   28.75          24.38                               
 Palo Verde EL-PK-PLVD-SNL              27.75          25.00                               
 SP-15 EL-PK-SP15-SNL                   29.50          28.50                               
 
 (Reporting by Scott DiSavino; Editing by Nick Zieminski, Lisa
Shumaker and Tom Brown)
  
 
 
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