April 23, 2020 / 12:24 PM / a month ago

U.S. natgas futures hold near 9-week high ahead of storage report

    April 23 (Reuters) - U.S. natural gas futures held near a
nine-week high on Thursday as the market waited for direction
from a federal report expected to show a smaller than usual
weekly storage build.
    Analysts said utilities likely injected 39 billion cubic
feet (bcf) of gas into storage during the week ended April 17.
That compares with an increase of 92 bcf during the same week
last year and a five-year (2015-19) average build of 49 bcf for
the period.
    If correct, the increase would bring stockpiles to 2.136
trillion cubic feet (tcf), 20.3% above the five-year average of
1.776 tcf for this time of year.
    The U.S. Energy Information Administration (EIA) will
release its weekly storage report at 10:30 a.m. EDT (1430 GMT)
on Thursday.
    Front-month gas futures for May delivery on the New
York Mercantile Exchange fell 0.7 cents, or 0.4%, to $1.932 per
million British thermal units at 7:56 a.m. EDT (1156 GMT).
    Despite expectations demand will decline due to government
lockdowns to slow the spread of coronavirus, gas futures were on
track to rise for a third week in a row - up about 19% during
that time - on expectations production will decline as drillers
shut oil wells in shale basins due to the massive recent
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.
    U.S. crude was on track to fall for a third week in a
row or about 45% during that time.
    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.
Calendar 2021 has traded over 2022 for 31
days in a row and over 2025 for 21 days.
    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.
    Those expected declines are showing up in the daily data.
Gas output in the Lower 48 states fell to an 11-week low of 92.1
bcfd on Wednesday from 92.3 bcfd on Tuesday, according to data
provider Refinitiv.
    Demand in the Lower 48 states, including exports, meanwhile,
is also expected to decline as the weather turns milder, falling
from 93.1 bcfd this week to 87.8 bcfd next, according to
Refinitiv. That is lower than Wednesday's forecasts of 93.5 bcfd
this week and 88.9 bcfd next week.
          
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 10      April 17     average    
                                       17(Forecast)     (Actual)                 April 17    
 U.S. natgas storage (bcf):                +29            +73          +92          +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                             124            124          113          120          115
 U.S. GFS CDDs                              59             59           45          46            42
 U.S. GFS TDDs                             173            173          158          166          157
                                                                                             
 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              93.2           92.5         92.6        89.8          77.2
 U.S. Imports from Canada                  6.3            5.9          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           98.3         99.3        97.6          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.1            2.4          2.4          2.7          2.3
 U.S. Exports to Mexico                    4.4            4.6          4.9          4.0          3.7
 U.S. LNG Exports                          8.4            8.1          8.1          5.1          1.8
 U.S. Commercial                           10.2           9.0          7.3          6.5          8.2
 U.S. Residential                          14.5           12.4         9.1          7.7          11.3
 U.S. Power Plant                          27.5           27.2         27.2        25.7          21.5
 U.S. Industrial                           23.4           22.6         22.1        21.8          23.0
 U.S. Plant Fuel                           4.6            4.6          4.6          4.6          4.6
 U.S. Pipe Distribution                    2.2            2.1          1.9          2.1          2.2
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    82.6           78.0         72.3        68.5          70.9
 Total U.S. Demand                         97.6           93.1         87.8        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                   1.90           1.92                               
 Transco Z6 New York NG-CG-NY-SNL        1.81           1.81                               
 PG&E Citygate NG-CG-PGE-SNL             2.29           2.36                               
 Dominion South NG-PCN-APP-SNL           1.61           1.66                               
 Chicago Citygate NG-CG-CH-SNL           1.88           1.83                               
 Algonquin Citygate NG-CG-BS-SNL         2.05           2.14                               
 SoCal Citygate NG-SCL-CGT-SNL           1.70           1.61                               
 Waha Hub NG-WAH-WTX-SNL                 1.27           0.33                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             22.00          20.00                               
 PJM West EL-PK-PJMW-SNL                20.00          21.00                               
 Ercot North EL-PK-ERTN-SNL             39.00          19.00                               
 Mid C EL-PK-MIDC-SNL                   12.45          15.40                               
 Palo Verde EL-PK-PLVD-SNL              17.75          12.75                               
 SP-15 EL-PK-SP15-SNL                   15.00          13.25                               
 
 (Reporting by Scott DiSavino)
  
 
 
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