June 25, 2020 / 12:56 PM / 7 days ago

U.S. natgas futures on track to drop to 25-year low as stockpiles fill fast

    June 25 (Reuters) - U.S. natural gas futures neared a 25-year low on Thursday as demand destruction
from the coronavirus left the world awash in gas that utilities have been forced to squeeze into storage
caverns that are expected to be full by the end of the summer season.
    Analysts said U.S. utilities likely injected a bigger-than-normal 106 billion cubic feet (bcf) of
gas into storage during the week ended June 19. That compares with an increase of 103 bcf during the
same week last year and a five-year (2015-19) average build of 73 bcf for the period.
    If correct, the increase would bring stockpiles to 2.998 trillion cubic feet (tcf), 17.8% above the
five-year average of 2.546 tcf for this time of year. By the end of the injection season in October,
analysts expect U.S. inventories will reach a record high near 4.1 tcf.
    On its second to last day as the front-month, gas futures for July delivery fell 4.7 cents,
or 2.9%, to $1.550 per million British thermal units (mmBtu) at 8:17 a.m. EDT (1217 GMT). If the
contract closes at that level it would be its lowest settle since August 1995.
    The August future, which will soon be the front-month was down about 3 cents to $1.63 per
mmBtu.
    Stockpiles are filling despite a drop in output this year. Refinitiv said production in the Lower 48
U.S. states has averaged 87.5 billion cubic feet per day (bcfd) in June, down from a 16-month low of
87.9 bcfd in May.
    Liquefied natural gas exports, meanwhile, were on track to rise to a two-week high of 4.9 bcfd on
Thursday as flows to the Cameron plant in Louisiana hit a record high. That is up from a 14-month low of
3.6 bcfd last week.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                          Jun 19         Jun 12       Jun 19     average    
                                        (Forecast)      (Actual)                  Jun 19    
 U.S. natgas storage (bcf):                +106           +85          +103        +73      
                                                                                            
                                                                                            
 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                              2              2            5           7            5
 U.S. GFS CDDs                             212            210          193         188          184
 U.S. GFS TDDs                             214            212          198         195          189
                                                                                            
 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              88.0           87.4         87.3        90.9         77.5
 U.S. Imports from Canada                  5.8            6.4          6.6         7.2          7.9
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         93.8           93.7         93.9        98.1         85.5
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.2            2.3          2.3         2.2          1.9
 U.S. Exports to Mexico                    5.2            5.5          5.3         5.3          4.1
 U.S. LNG Exports                          3.8            4.1          4.4         5.9          1.9
 U.S. Commercial                           4.5            4.4          4.3         4.4          4.7
 U.S. Residential                          3.8            3.5          3.5         3.6          4.1
 U.S. Power Plant                          30.5           37.1         38.2        34.1         31.0
 U.S. Industrial                           21.4           21.3         21.4        21.3         20.4
 U.S. Plant Fuel                           4.3            4.3          4.3         4.4          4.5
 U.S. Pipe Distribution                    1.8            1.9          2.0         1.9          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    66.5           72.7         73.8        69.8         66.7
 Total U.S. Demand                         77.8           84.7         85.8        83.2         74.6
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.64           1.61                              
 Transco Z6 New York NG-CG-NY-SNL        1.51           1.55                              
 PG&E Citygate NG-CG-PGE-SNL             2.36           2.38                              
 Dominion South NG-PCN-APP-SNL           1.55           1.42                              
 Chicago Citygate NG-CG-CH-SNL           1.59           1.52                              
 Algonquin Citygate NG-CG-BS-SNL         1.57           1.68                              
 SoCal Citygate NG-SCL-CGT-SNL           1.85           1.98                              
 Waha Hub NG-WAH-WTX-SNL                 1.45           1.45                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             22.00          24.25                              
 PJM West EL-PK-PJMW-SNL                19.50          26.50                              
 Ercot North EL-PK-ERTN-SNL             18.50          20.00                              
 Mid C EL-PK-MIDC-SNL                   17.83           8.79                              
 Palo Verde EL-PK-PLVD-SNL              26.00          29.50                              
 SP-15 EL-PK-SP15-SNL                   26.25          29.75                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski)
  
 
 
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