March 20, 2020 / 2:23 PM / 10 days ago

U.S. natgas futures slide over 2% with drop in oil prices

    March 20 (Reuters) - U.S. natural gas futures fell over 2% on Friday with another big drop in oil
prices, putting the gas contract near the 24-year low it hit earlier this week as steps taken to slow the
spread of coronavirus cut into global economic growth and energy demand.
    Traders noted that gas price decline came despite a projected increase in gas demand next week due
mostly to a rise in pipeline flows to liquefied natural gas (LNG) export terminals.
    After falling to its lowest since September 1995 earlier in the week, front-month gas futures
for April delivery on the New York Mercantile Exchange fell 3.6 cents, or 2.2%, to $1.618 per million
British thermal units by 9:57 a.m. EDT (1357 GMT). That put the front-month on track to fall about 14%
this week, its biggest weekly decline since November.
    Crude oil prices, meanwhile, fell over 5% on Friday.
    Looking ahead, the premium of futures for May over April NGJ20-K20 rose to its highest on record
and the premium of calendar 2021 over 2022 rose for a sixth session in a row, the
most since February 2017, on expectations low energy prices will start to boost energy demand.
    Even before the coronavirus started to spread, gas prices were already trading near their lowest in
years as record production and months of mild weather enabled utilities to leave more gas in storage,
making fuel shortages and price spikes unlikely this winter.
    Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in
the U.S. Lower 48 states, including exports, would rise from an average of 104.3 billion cubic feet per
day (bcfd) this week to 104.7 bcfd next week before falling to 103.4 bcfd in two weeks. That compares
with Refinitiv's forecast on Thursday of 104.2 bcfd this week and 103.0 bcfd next week.
    The projected increase next week is almost entirely due to an expected increase in gas flows to LNG
export plants. The amount of gas expected to flow to those plants was on track to rise to 9.1 bcfd on
Friday from a five-month low of 6.4 bcfd on Wednesday after fog slowed tanker traffic into Cheniere
Energy Inc's Sabine Pass plant in Louisiana, according to early estimates from Refinitiv. 
    With the weather turning milder, next-day power prices in New England EL-PK-NPMS-SNL fell to their
lowest since July 2015, while gas prices at the U.S. Henry Hub benchmark NG-W-HH-SNL in Louisiana fell
their lowest since March 2016.
                     
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 20      March 13      March 20     average    
                                        (Forecast)      (Actual)                 March 20    
 U.S. natgas storage (bcf):                -22             -9          -39          -40      
                                                                                             
                                                                                             
 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                             240            235          263          250          245
 U.S. GFS CDDs                              29             28           7           17            14
 U.S. GFS TDDs                             269            263          370          267          259
                                                                                             
 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         94.0        88.9          76.9
 U.S. Imports from Canada                  6.6            6.8          7.0          8.6          8.5
 U.S. LNG Imports                          0.1            0.0          0.0          0.0          0.2
 Total U.S. Supply                        100.5          101.0        101.0        97.5          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    3.0            2.8          2.7          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          9.1          5.4          1.8
 U.S. Commercial                           10.9           11.2         11.2        12.4          12.3
 U.S. Residential                          16.2           16.8         16.9        19.2          19.4
 U.S. Power Plant                          27.9           29.9         28.9        26.1          23.7
 U.S. Industrial                           23.1           23.2         23.2        23.6          22.6
 U.S. Plant Fuel                           4.6            4.7          4.6          4.7          4.7
 U.S. Pipe Distribution                    2.3            2.3          2.3          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    85.0           88.3         87.3        88.4          85.3
 Total U.S. Demand                        101.6          104.3        104.7        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                   1.68           1.73                               
 Transco Z6 New York NG-CG-NY-SNL        1.25           1.31                               
 PG&E Citygate NG-CG-PGE-SNL             2.61           2.80                               
 Dominion South NG-PCN-APP-SNL           1.22           1.23                               
 Chicago Citygate NG-CG-CH-SNL           1.54           1.48                               
 Algonquin Citygate NG-CG-BS-SNL         1.38           1.42                               
 SoCal Citygate NG-SCL-CGT-SNL           2.13           2.07                               
 Waha Hub NG-WAH-WTX-SNL                 1.05           0.89                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             16.50          19.50                               
 PJM West EL-PK-PJMW-SNL                21.50          23.50                               
 Ercot North EL-PK-ERTN-SNL             22.50          24.50                               
 Mid C EL-PK-MIDC-SNL                   25.50          27.83                               
 Palo Verde EL-PK-PLVD-SNL              20.25          25.50                               
 SP-15 EL-PK-SP15-SNL                   27.25          28.00                               
 
 (Reporting by Scott DiSavino
Editing by Marguerita Choy)
  
 
 
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