March 16, 2020 / 3:41 PM / 21 days ago

U.S. natgas futures fall 3% with oil despite forecasts for more heating demand

    March 16 (Reuters) - U.S. natural gas futures fell about 3% on Monday along with a 10% drop in oil
prices on worries that global crude demand will decline as the coronavirus slows economic growth.
    That move lower in gas prices came despite forecasts for cooler weather and more heating demand in
the United States over the next two weeks than previously expected.
    Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.4 cents,
or 2.9%, to $1.815 per million British thermal units (mmBtu) at 11:29 a.m. EDT (1529 GMT).
    Speculators cut their net short positions on the NYMEX and Intercontinental Exchange last week by the
most since November to their lowest since November after sharp price declines in oil and gas due to
coronavirus concerns caused hedge funds to exit short positions faster than long positions.
    Overall, speculators exited both short and long positions, causing
speculative open interest in NYMEX futures and options to drop to its lowest since early January.
    Even before the coronavirus started to spread, gas prices were already near their lowest in four
years because near-record production and mild weather enabled utilities to leave more gas in storage,
making fuel shortages and price spikes this winter unlikely. Gas futures were trading about 38% below an
eight-month high of $2.905 per mmBtu hit in early November.
    Brent fell by 10% on Monday, and U.S. crude dropped below $30, as emergency rate cuts
by the U.S. Federal Reserve and its global counterparts failed to tame markets and China's factory output
plunged at the sharpest pace in 30 years amid the spread of coronavirus.
    Data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would
jump from an average of 103.2 billion cubic feet per day (bcfd) this week to 108.7 bcfd next week. That
is much higher than Refinitiv's forecasts on Friday of 104.3 bcfd this week and 103.8 bcfd next week.
    The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants was on track to fall to
7.7 bcfd on Monday from 8.4 bcfd on Sunday due mostly to declines at Cheniere Energy Inc's Sabine
Pass export terminal in Louisiana, according to data from Refinitiv. That compares with an average of 8.0
bcfd last week and a daily all-time high of 9.5 bcfd on Jan. 31.
    Gas production in the Lower 48 states held at 94.5 bcfd on Monday, the same as Sunday. That compares
with an average of 93.9 bcfd last week and an all-time daily high of 96.6 bcfd on Nov. 30.
    Analysts said they expect gas production to decline over the next year as energy firms slash spending
on new oil drilling due to the collapse in crude prices since much of the growth in gas output in recent
years has come from gas associated with oil production in shale basins like the Permian in West Texas.

                 
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 13       March 6      March 13     average    
                                        (Forecast)      (Actual)                 March 13    
 U.S. natgas storage (bcf):                -12            -48          -91          -63      
                                                                                             
                                                                                             
 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                             278            252          263          250          262
 U.S. GFS CDDs                              21             26           7           17            12
 U.S. GFS TDDs                             299            278          370          267          274
                                                                                             
 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              93.7           94.2         94.2        88.9          76.9
 U.S. Imports from Canada                  6.6            6.9          7.1          8.6          8.5
 U.S. LNG Imports                          0.1            0.1          0.0          0.0          0.2
 Total U.S. Supply                        100.5          101.1        101.2        97.5          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    3.0            2.8          2.9          2.8          2.6
 U.S. Exports to Mexico                    5.6            5.6          5.6          4.8          3.8
 U.S. LNG Exports                          8.0            7.8          8.0          5.4          1.8
 U.S. Commercial                           10.9           11.1         12.6        12.4          12.3
 U.S. Residential                          16.2           16.6         19.8        19.2          19.4
 U.S. Power Plant                          27.9           29.0         28.5        26.1          23.7
 U.S. Industrial                           23.1           23.2         24.0        23.6          22.6
 U.S. Plant Fuel                           4.6            4.7          4.7          4.7          4.7
 U.S. Pipe Distribution                    2.3            2.3          2.5          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    85.0           87.0         92.2        88.4          85.3
 Total U.S. Demand                        101.6          103.2        108.7        101.4         93.5
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.94           1.83                               
 Transco Z6 New York NG-CG-NY-SNL        1.67           1.50                               
 PG&E Citygate NG-CG-PGE-SNL             2.75           2.75                               
 Dominion South NG-PCN-APP-SNL           1.54           1.45                               
 Chicago Citygate NG-CG-CH-SNL           1.74           1.66                               
 Algonquin Citygate NG-CG-BS-SNL         1.78           1.67                               
 SoCal Citygate NG-SCL-CGT-SNL           2.35           2.35                               
 Waha Hub NG-WAH-WTX-SNL                 0.56           0.82                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             17.75          20.25                               
 PJM West EL-PK-PJMW-SNL                25.78          22.25                               
 Ercot North EL-PK-ERTN-SNL             35.00          20.75                               
 Mid C EL-PK-MIDC-SNL                   38.50          23.50                               
 Palo Verde EL-PK-PLVD-SNL              39.00          29.50                               
 SP-15 EL-PK-SP15-SNL                   39.75          30.50                               
 
 (Reporting by Scott DiSavino; Editing by David Gregorio)
  
 
 
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