May 4, 2020 / 3:29 PM / a month ago

U.S. natgas rises on forecasts for cooler weather, more demand and slowing output

    May 4 (Reuters) - U.S. natural gas futures rose on Monday on forecasts for cooler weather and more
heating demand over the next two weeks than previously expected and a slowing of output as drillers shut
oil wells in shale basins due to the 67% collapse in crude prices since the start of the year.
    Those oil wells also produce a lot of gas.
    That price increase comes despite long-term forecasts for demand and exports to decline due to
government lockdowns to stop the spread of the coronavirus.
    Front-month gas futures for June delivery on the New York Mercantile Exchange (NYMEX) rose
7.4 cents, or 3.9%, to $1.964 per million British thermal units at 11:01 a.m. EDT (1501 GMT), putting
the contract on track for its highest close in 11 weeks.
    Looking ahead, gas futures for the balance of 2020 and calendar 2021 were
trading higher than the front-month on expectations demand will jump once governments loosen travel and
work restrictions.
    That increase prompted speculators to boost their net long positions on the NYMEX and
Intercontinental Exchange last week to the highest since April 2019 for a third week in a row.

    The U.S. Energy Information Administration (EIA) projected gas production will fall 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 as energy firms cut spending on drilling.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 89.8 bcfd so far
in May, down from an eight-month low of 92.8 bcfd in April and an all-time monthly high of 95.4 bcfd in
November.
    The EIA projected coronavirus lockdowns will cut U.S. gas use - not including exports - to an
average of 83.8 bcfd in 2020 and 81.2 bcfd in 2021 from a record 85.0 bcfd in 2019.
    With cooler weather coming, Refinitiv projected demand in the Lower 48 states, including exports,
would rise from an average of 84.2 bcfd this week to 88.5 bcfd next week. That compares with Refinitiv's
forecasts on Friday of 79.5 bcfd this week and 82.8 bcfd next week.
    Even though the coronavirus is reducing gas use, EIA still expects U.S. exports to hit record highs
in coming years as more liquefied natural gas (LNG) export plants and pipelines enter service. Still,
the agency has reduced its projections on the pace of that growth due to the pandemic.
    Refinitiv said average U.S. pipeline exports to Canada rose to 2.9 bcfd so far in May, up from a
six-month low of 2.4 bcfd in April and compared with an all-time monthly high of 3.5 bcfd in December.
Average pipeline exports to Mexico, meanwhile, fell 4.1 bcfd so far in May, down from an 11-month low of
4.7 bcfd in April and a record 5.6 bcfd in March.
    U.S. LNG exports averaged 7.2 bcfd so far in May, down from a four-month low of 8.1 bcfd in April
and an all-time high of 8.7 bcfd in February.
                  
                                       Week ended      Week ended    Year ago   Five-year   
                                           May 1        Apr 24        May 1      average    
                                        (Forecast)      (Actual)                  May 1     
 U.S. natgas storage (bcf):                +92            +70          +96         +74      
                                                                                            
                                                                                            
 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                             113            121           87          81           79
 U.S. GFS CDDs                              66             57           59          67           62
 U.S. GFS TDDs                             179            178          146         128          141
                                                                                            
 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              91.9           90.1         90.8        88.9         77.0
 U.S. Imports from Canada                  5.9            5.9          6.6         7.7          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         97.8           96.0         97.4        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            2.9          2.9         2.5          1.9
 U.S. Exports to Mexico                    4.7            4.3          4.5         4.5          3.9
 U.S. LNG Exports                          7.5            7.6          8.0         5.5          2.0
 U.S. Commercial                           7.3            6.7          7.8         6.1          5.5
 U.S. Residential                          9.2            8.0          10.0        6.9          6.1
 U.S. Power Plant                          26.1           26.2         26.3        26.4         25.3
 U.S. Industrial                           22.2           22.1         22.5        21.9         20.6
 U.S. Plant Fuel                           4.5            4.5          4.5         4.5          4.5
 U.S. Pipe Distribution                    1.9            1.8          1.9         1.8          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    71.5           69.4         73.1        67.7         64.0
 Total U.S. Demand                         86.4           84.2         88.5        80.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.69           1.63                              
 Transco Z6 New York NG-CG-NY-SNL        1.28           1.41                              
 PG&E Citygate NG-CG-PGE-SNL             2.35           2.47                              
 Dominion South NG-PCN-APP-SNL           1.32           1.38                              
 Chicago Citygate NG-CG-CH-SNL           1.71           1.62                              
 Algonquin Citygate NG-CG-BS-SNL         1.31           1.52                              
 SoCal Citygate NG-SCL-CGT-SNL           1.45           1.63                              
 Waha Hub NG-WAH-WTX-SNL                 1.45           1.19                              
                                                                                            
 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                19.75          21.00                              
 Ercot North EL-PK-ERTN-SNL             68.89          17.50                              
 Mid C EL-PK-MIDC-SNL                   11.95          21.25                              
 Palo Verde EL-PK-PLVD-SNL              21.25          18.75                              
 SP-15 EL-PK-SP15-SNL                   17.75          13.75                              
 
 (Reporting by Scott DiSavino; Editing by Andrea Ricci)
  
 
 
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