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Jul 02, 2023

UPDATE 1

(Adds latest prices) Aug 23 (Reuters) - U.S. natural gas futures fell about 3% to a three-week low on Wednesday as the amount of gas flowing to liquefied natural gas (LNG) export plants remained low

(Adds latest prices) Aug 23 (Reuters) - U.S. natural gas futures fell about 3% to a three-week low on Wednesday as the amount of gas flowing to liquefied natural gas (LNG) export plants remained low due to maintenance outages and as European gas prices dropped on hopes Australia will avoid strikes at LNG plants. Front-month gas futures for September delivery on the New York Mercantile Exchange fell 6.3 cents, or 2.5%, to settle at $2.497 per million British thermal units (mmBtu), their lowest close since Aug. 2. European gas prices at the Dutch Title Transfer Facility (TTF) benchmark for September plunged about 15% to a one-week low of around $12 per mmBtu on solid European gas inventories, the restart of nuclear power reactors in France and hopes by some that Australia will avoid strikes. U.S. gas futures fell despite forecasts for hotter weather and higher gas demand over the next two weeks than previously expected as a brutal heat wave moves slowly across the central U.S. That heat wave is expected to boost power demand to record highs in the 15-state Midcontinent Independent System Operator (MISO) territory from Minnesota to Louisiana on Thursday and the Electric Reliability Council of Texas (ERCOT) grid in Texas on Friday as homes and businesses crank up air conditioners. In the MISO region, the grid operator projected it may be forced to use some power held in reserve to meet demand plus required reserves at the peak hour on Thursday. Traders noted that grids usually call for consumers to conserve energy when available supplies don't meet demand plus reserve requirements. MISO projected demand would reach a record 128,222 megawatts (MW) on Thursday. To meet that load plus 2,410 MW of required reserves, or 130,632 MW, the grid said it expected to have about 130,267 MW of resources available with 125,130 MW from supplies within MISO and 5,137 MW of imports. MISO's current all-time high is 127,100 MW set in July 2011. Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed. The heat wave moving across the central U.S. helped boost spot or next-day gas prices for Tuesday and Wednesday over futures for only the third and fourth time since late April. Energy traders said those higher spot prices were limiting the decline in September futures. Next-day gas at the Henry Hub benchmark in Louisiana sold for $2.60 per mmBtu for Tuesday and $2.58 for Wednesday. SUPPLY AND DEMAND Data provider Refinitiv said average gas output in the U.S. Lower 48 states had eased to 101.6 billion cubic feet per day (bcfd) so far in August from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May. Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Sept. 7. Refinitiv forecast U.S. gas demand, including exports, would rise from 103.9 bcfd this week to 104.7 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Tuesday. Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 bcfd in July to 12.3 bcfd so far in August due mostly to reductions at Cheniere Energy's Sabine Pass in Louisiana and Corpus Christi in Texas. That compares with a monthly record of 14.0 bcfd in April. Week ended Week ended Year ago Five-year Aug 18 Aug 11 Aug 18 average Forecast Actual Aug 18 U.S. weekly natgas storage change (bcf): 33 35 54 49 U.S. total natgas in storage (bcf): 3,098 3,065 2,570 2,815 U.S. total storage versus 5-year average 10.1% 10.8% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2017-2021) Henry Hub 2.53 2.56 8.78 6.54 2.89 Title Transfer Facility (TTF) 11.95 13.67 69.68 40.50 7.49 Japan Korea Marker (JKM) 14.30 14.30 53.22 34.11 8.95 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 3 3 1 7 10 U.S. GFS CDDs 223 216 200 180 165 U.S. GFS TDDs 26 219 201 187 175 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 101.4 101.2 101.4 98.2 92.0 U.S. Imports from Canada 7.0 7.2 7.0 8.6 8.1 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 108.4 108.3 108.4 106.8 100.8 U.S. Demand (bcfd) U.S. Exports to Canada 1.3 1.4 1.4 2.4 2.5 U.S. Exports to Mexico 7.0 6.9 6.6 5.5 5.6 U.S. LNG Exports 12.5 11.9 12.3 11.1 6.1 U.S. Commercial 4.4 4.5 4.5 4.5 4.5 U.S. Residential 3.5 3.6 3.6 3.6 3.4 U.S. Power Plant 46.0 46.9 47.5 41.8 41.2 U.S. Industrial 21.4 21.4 21.4 21.3 21.5 U.S. Plant Fuel 5.0 5.0 5.0 5.1 5.0 U.S. Pipe Distribution 2.2 2.2 2.2 2.2 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 82.6 83.7 84.5 78.6 78.0 Total U.S. Demand 103.4 103.9 104.7 97.6 92.2 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2022 2021 2020 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 83 83 107 81 103 Jan-Jul 77 77 102 79 98 Oct-Sep 76 76 103 81 95 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Aug 25 Aug 18 Aug 11 Aug 4 Jul 28 Wind 8 7 7 7 7 Solar 3 4 4 4 4 Hydro 6 6 5 5 5 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 44 45 45 45 45 Coal 20 19 19 20 20 Nuclear 17 17 17 17 16 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.58 2.60 Transco Z6 New York 1.21 1.28 PG&E Citygate 4.50 4.96 Eastern Gas (old Dominion South) 1.32 1.26 Chicago Citygate 2.46 2.40 Algonquin Citygate 1.45 1.34 SoCal Citygate 3.90 3.95 Waha Hub 2.16 2.25 AECO 1.93 1.94 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 23.25 24.75 PJM West 35.25 36.00 Ercot North 255.00 72.00 Mid C 40.25 41.00 Palo Verde 42.75 45.50 SP-15 43.50 44.00 (Reporting by Scott DiSavino; Editing by Paul Simao and David Gregorio)

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