January 26, 2016 / 7:57 PM / 2 years ago

UPDATE 1-U.S. natgas futures little changed on mixed weather forecasts

(Adds latest prices)
    Jan 26 (Reuters) - U.S. natural gas futures traded within a few cents of unchanged on
Tuesday for a fifth day in a row on forecasts for mixed, but still warmer-than-normal weather
over the next two weeks.
    On its second-to-last day as the front month, February futures on the New York Mercantile
Exchange closed up 2.2 cents, or 1 percent, at $2.18 per million British thermal units.
    That small gain put the front month up for a fifth straight day of increases, albeit tiny
ones. Still, that is its longest winning streak since October.
    The March contract, meanwhile, which will be the front month in a few days, closed up 0.3
cents at $2.158 on Tuesday.
    "With about two months left to winter and with extreme weather not forecast ... the market
is likely to remain within the boundaries of the wide trading range it has been in since
December," Dominick Chirichella, senior partner at the Energy Management Institute in New York,
said in a note.
    That trading range is bounded by about $2.50 per mmBtu on the upper resistance end and
around $1.70 on the lower support side, Chirichella said.
    Both the U.S. and European weather models show temperatures remaining slightly warmer than
normal through mid-February. The U.S. model called for warmer weather over the next two weeks,
while the European model called for cooler weather during that time.
    Even though heating demand has been light so far this winter with the weather about 13
percent warmer than the 30-year norm and 17 percent warmer than the polar vortex winter of
2014-2015, gas usage was the same as last year and 7 percent higher than usual, according to
data from Thomson Reuters Analytics.
    That's because the power sector is burning record amounts of gas to generate electricity
since the fuel remains relatively cheap compared with coal, which carries higher environmental
and transport costs.
    So far in January, the power sector has burned on average 25.7 billion cubic feet of gas per
day, according to Thomson Reuters Analytics, putting it on track to top the record 23.0 bcfd it
burned last January.
    Traders have said it makes sense for generators to burn gas instead of coal when the gas
premium over coal is less than $1 per mmBtu as it has been since August and most of the rest of
2015.
                    
                                        Week ended   Week ended   Year    Five-year
                                          Jan. 22     Jan. 15      Ago     Average
                                        (forecast)                        
 U.S. natgas storage (in bcf):             -208         -178      -112       -170
                                                                                    
 Heating & Cooling Degree Days                                                      
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 GFS HDDs                                   421         429        440              
 GFS CDDs                                    1           1          3               
                                                                                    
 EC HDDs                                    394         381        412              
 EC CDDs                                     1           1          2               
                                                                                    
 GFS Gas Consumption                                                                
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 Residential                               27.6         28.2      28.5              
 Commercial                                15.9         16.2      16.1              
 Power                                     25.1         25.1      19.5              
 Industrial                                22.5         22.5      24.3              
 Total                                     90.9         92.0      88.4              
                                                                                    
 EC Gas Consumption                                                                 
 Two-Week Average                       Current Day  Prior Day   30-Year            
                                                                  Norm    
 Residential                               27.5         26.7      28.5              
 Commercial                                15.8         15.4      16.2              
 Power                                     25.1         25.0      19.5              
 Industrial                                22.4         22.2      24.3              
 Total                                     90.7         89.4      88.4              
                                                                                    
 Thomson Reuters Supply Estimates                                                   
 (bcfd):                                                                  
                                        Current Day  Prior Day    Prior   High since
                                                                  Year       2011
 U.S. Lower 48 production                  71.7         71.9      73.6       75.2
 Net U.S. imports from Canada               6.1         5.9        6.4       8.3
 U.S. LNG imports                           0.3         0.5        0.8       2.8
 U.S. LNG exports                                                         
 U.S. exports to Mexico                     2.9         2.9        2.7       4.3
                                                                                    
                                                                                    
 ICE U.S. Natural Gas Next-Day Prices                                               
 ($ per mmBtu):                                                           
 Hub                                    Current Day  Prior Day                      
 Algonquin E-ALGCIT-IDX                  4.19         3.59                        
 Dominion South E-DOMSP-IDX              1.59         1.41                        
 New York E-TSCO6NY-IDX                  2.50         2.68                        
 Henry Hub GT-HH-IDX                     2.23         2.14                        
 Chicago MC-CHICIT-IDX                   2.22         2.17                        
 SoCal Border W-SOBOR-IDX                2.29         2.22                        
                                                                                    
 ICE U.S. Power Next-Day Prices                                                     
 ($ per megawatt-hour):                                                   
 Hub                                    Current Day  Prior Day                      
 Ercot North SE-ERCONP-IDX               25.25       21.44                        
 Mid C W-MIDCP-IDX                       18.72       20.23                        
 New England E-NEPLMHP-IDX               36.34       40.72                        
 Palo Verde W-PVP-IDX                    20.95       20.10                        
 PJM West E-PJWHRTP-IX                   28.75       31.14                        
 SP-15 W-SP15-IDX                        28.19                                    
 
 (Reporting by Scott DiSavino; Editing by Lisa Von Ahn and Chizu Nomiyama)

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