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UPDATE 1-U.S. natgas eases to 1-yr low as warm weather causes worst start for year

Reuters · 01/06/2023 14:53
UPDATE 1-U.S. eases to 1-yr low as warm weather causes worst start for year

Adds latest prices


- U.S. gas futures eased to a fresh one-year low on Friday on forecasts for warmer-than- weather and lower than usual heating demand to continue into late January.

With the contract down about 17% so far this year, the gas market had its worst start to a year on record, according to Refinitiv data going back to 1991, the first full year of trade for the gas futures contract.

That tops the current worst four-day start to a year of down 14% in 2006, and compares with the best four-day start of up 21% in 1997.

Low heating demand during what is usually the coldest part of the year should allow utilities to leave more gas in storage than usual this month.

Front-month gas futures NGc1 for February delivery fell 1.0 cent, or 0.3%, to settle at $3.710 per million British thermal units (mmBtu), their lowest close since Dec. 30.

Earlier on Friday, the contract dropped more than 5% to $3.52 per mmBtu, its lowest intraday price since July 2021.

For the week, the front month fell about 17%, putting it down about 44% over the past three weeks, its biggest three-week drop in history, according to Refinitiv data.

That keeps the contract in technically oversold territory, with a relative strength index (RSI) below 30 for a seventh day in a row for the first time since April 2019.

Traders said the market's biggest uncertainty remains when Freeport LNG will restart its liquefied gas (LNG) export plant in Texas.

After several delays from October to November and then to December, Freeport expects the facility to return in the second half of January, pending regulatory approvals.

Analysts have long been saying that Freeport would likely return during the first or second quarter of 2023 because the company still has a lot of work to do to satisfy federal regulators, including training staff in procedures, before restarting the plant.

Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production.

Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, and human error and fatigue, according to a report by consultants hired to review the incident and suggest corrective actions.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 98.2 bcfd so far in January, up from 96.7 bcfd in December but still below the monthly record of 99.9 bcfd in November 2022.

Even though the weather is expected to remain warmer than through late January, Refinitiv projected average U.S. gas demand, including exports, would jump from 110.8 bcfd this week to 121.8 bcfd week as temperatures ease ahead of what are usually the coldest weeks of the year.

In two weeks, however, Refinitiv projected gas demand would ease to 120.5 bcfd as the weather turns more mild.


Week ended Jan 6 (Forecast)

Week ended
Dec 30 (Actual)

Year ago Jan 6

Five-year average Jan 6


U.S. weekly storage change (bcf):

-31

-213

-183

-151


U.S. total in storage (bcf):

2,860

2,891

3,016

2,948


U.S. total storage versus 5-year average

-3.0%

-6.7%
















Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2022

Five Year Average (2018-2022)

Henry Hub NGc1

3.60

3.72

4.26

6.54

3.60

Title Transfer Facility (TTF) TRNLTTFMc1

23.21

21.15

28.25

40.50

14.39

Japan Korea Marker (JKM) JKMc1

28.85

29.50

28.53

34.11

14.31













Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast

Current Day

Prior Day

Prior Year

10-Year Norm

30-Year Norm

U.S. GFS HDDs

350

346

472

440

445

U.S. GFS CDDs

2

2

4

4

3

U.S. GFS TDDs

352

348

476

444

448







Refinitiv U.S. Weekly GFS Supply and Demand Forecasts


Prior Week

Current Week

Next Week

This Week Last Year

Five-Year Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

87.0

98.5

99.0

94.0

88.8

U.S. Imports from Canada

10.1

7.8

8.8

9.2

9.4

U.S. LNG Imports

0.0

0.0

0.0

0.1

0.4

Total U.S. Supply

97.0

106.4

107.8

103.3

98.6







U.S. Demand (bcfd)






U.S. Exports to Canada

1.5

3.2

3.0

2.5

2.8

U.S. Exports to Mexico

5.0

4.9

5.1

5.5

5.3

U.S. LNG Exports

10.7

11.8

12.5

12.0

7.2

U.S. Commercial

20.7

12.6

15.0

19.3

17.1

U.S. Residential

36.0

20.0

24.5

33.1

29.8

U.S. Power Plant

33.8

27.2

29.3

30.5

28.5

U.S. Industrial

26.8

23.7

24.7

26.2

25.6

U.S. Plant Fuel

4.3

4.9

4.9

4.9

4.9

U.S. Pipe Distribution

3.3

2.4

2.7

2.4

2.4

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

125.0

90.9

101.2

116.5

108.4

Total U.S. Demand

142.1

110.8

121.8

136.5

123.7













U.S. weekly power generation percent by fuel - EIA


Week ended Jan 6

Week ended Dec 30

Week ended Dec 23

Week ended Dec 16

Week ended Dec 9

Wind

13

11

9

12

9

Solar

2

2

2

2

2

Hydro

7

6

6

6

6

Other

2

2

2

2

2

Petroleum

0

1

0

0

0

Natural Gas

35

35

37

37

39

Coal

18

23

24

20

20

Nuclear

23

19

19

20

21







SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub

Current Day

Prior Day




Henry Hub NG-W-HH-SNL

3.78

3.75




Transco Z6 New York NG-CG-NY-SNL

3.23

3.28




PG&E Citygate NG-CG-PGE-SNL

16.58

18.60




Dominion South NG-PCN-APP-SNL

2.78

2.82




Chicago Citygate NG-CG-CH-SNL

3.40

3.42




Algonquin Citygate NG-CG-BS-SNL

4.43

4.10




SoCal Citygate NG-SCL-CGT-SNL

18.65

20.18




Waha Hub NG-WAH-WTX-SNL

1.76

1.81




AECO NG-ASH-ALB-SNL

3.03

3.21










SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub

Current Day

Prior Day




New England EL-PK-NPMS-SNL

45.75

45.00




PJM West EL-PK-PJMW-SNL

43.50

42.50




Ercot North EL-PK-ERTN-SNL

24.00

33.50




Mid C EL-PK-MIDC-SNL

55.50

60.68




Palo Verde EL-PK-PLVD-SNL

102.50

183.00




SP-5 EL-PK-SP15-SNL

155.00

189.50





(Reporting by Scott DiSavino; Editing by Chizu Nomiyama and Jan Harvey)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.))

For Refinitiv type ENERGY in Eikon search bar and then go to the GAS drop down and the NORTH AMERICA drop down or see: cpurl://apps.cp./cms/?pageid=usa-gas


For Interactive Map, type 'Interactive Map' in the box at upper left of the Reuters terminal.


For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html


For -day SNL U.S. gas prices, see: 0#SNL-NG


For -day SNL U.S. power prices, see: 0#SNL-PWR


For U.S. price and storage polls, see: NGAS/POLL


For U.S. power outages, see: NUKE/


For U.S. Northwest hydro power report, see: NWRFC


For U.S./Canada gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44


For the U.S. gas speed guide, see: USGAS


For the U.S. power speed guide, see: USPOWER

To determine CFTC managed money position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C