May 7, 2020 / 3:15 PM / 2 months ago

UPDATE 2-U.S. natgas falls on big storage build, coronavirus demand destruction

 (Adds closing prices)
    May 7 (Reuters) - U.S. natural gas futures fell almost 3% on Thursday on a much bigger-than-usual
weekly storage build that analysts said was caused by coronavirus-related demand destruction.
    "The larger than expected build suggests ... lost demand is still overwhelming the market," said
Daniel Myers, market analyst at Gelber & Associates in Houston, noting gas use will remain low so long
as the economy remains shuttered by government lockdowns.
    The U.S. Energy Information Administration (EIA) said utilities injected 109 billion cubic feet
(bcf) of gas into storage during the week ended May 1.
    That was slightly bigger than the 106-bcf build analysts forecast in a Reuters poll and compares
with an increase of 96 bcf during the same week last year and a five-year (2015-19) average build of 74
bcf for the period.
    The increase last week boosted stockpiles to 2.319 trillion cubic feet (tcf), 20.5% above the
five-year average of 1.924 tcf for this time of year.
    Front-month gas futures for June delivery on the New York Mercantile Exchange fell 5.0 cents,
or 2.6%, to settle at $1.894 per million British thermal units.
    This has been a volatile week for U.S. gas.
    Prices jumped to a 16-week high on Tuesday after a big pipe shut and on slowing output,
but fell almost 9% on Wednesday, the biggest percentage decline in over a year, after the market failed
to break above the 200-day moving average and on more signs government lockdowns have cut demand and
exports.
    That price increase on Tuesday briefly made the U.S. front-month the most expensive of the world's
major gas benchmarks for the first time ever, ahead of the Title Transfer Facility (TTF) in
the Netherlands and the Japan/Korea Marker (JKM), both of which are trading near record lows.

    Analysts said high U.S. gas prices and low prices elsewhere in the world could prompt buyers of U.S.
liquefied natural gas (LNG) to cancel more cargoes in coming months.
    Looking ahead, U.S. gas futures for the balance of 2020 and calendar 2021 are
trading higher than the front-month on expectations demand will jump once governments loosen travel and
work restrictions.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states has fallen to 90.0 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.
    With even cooler weather coming, Refinitiv projected demand in the Lower 48, including exports,
would rise from an average of 83.7 bcfd this week to 87.6 bcfd next week. That is higher than
Refinitiv's forecasts on Wednesday of 82.9 bcfd this week and 85.4 bcfd next week.
    Refinitiv said U.S. LNG exports have averaged 7.0 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    
                                         (Actual)       (Actual)                  May 1     
 U.S. natgas storage (bcf):                +109           +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                             101            101           87          81           72
 U.S. GFS CDDs                              70             66           59          67           68
 U.S. GFS TDDs                             171            167          146         128          140
                                                                                            
 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           90.0         89.7        88.9         77.0
 U.S. Imports from Canada                  5.9            5.9          6.3         7.7          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         97.8           95.9         96.0        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            2.5          2.5         2.5          1.9
 U.S. Exports to Mexico                    4.7            4.4          4.5         4.5          3.9
 U.S. LNG Exports                          7.5            7.3          7.5         5.5          2.0
 U.S. Commercial                           7.3            6.6          8.1         6.1          5.5
 U.S. Residential                          9.2            7.8          10.6        6.9          6.1
 U.S. Power Plant                          26.1           26.4         25.2        26.4         25.3
 U.S. Industrial                           22.2           22.1         22.7        21.9         20.6
 U.S. Plant Fuel                           4.5            4.4          4.4         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           83.7         87.6        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                   1.90           1.93                              
 Transco Z6 New York NG-CG-NY-SNL        1.44           1.63                              
 PG&E Citygate NG-CG-PGE-SNL             2.86           2.95                              
 Dominion South NG-PCN-APP-SNL           1.42           1.49                              
 Chicago Citygate NG-CG-CH-SNL           1.89           1.97                              
 Algonquin Citygate NG-CG-BS-SNL         1.60           1.76                              
 SoCal Citygate NG-SCL-CGT-SNL           2.30           2.23                              
 Waha Hub NG-WAH-WTX-SNL                 1.76           1.77                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             18.75          20.00                              
 PJM West EL-PK-PJMW-SNL                25.00          23.48                              
 Ercot North EL-PK-ERTN-SNL             16.50          22.00                              
 Mid C EL-PK-MIDC-SNL                   18.50          16.64                              
 Palo Verde EL-PK-PLVD-SNL              27.25          20.00                              
 SP-15 EL-PK-SP15-SNL                   29.00          21.75                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski and Jonathan Oatis)
  
 
 
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