March 20, 2020 / 7:44 PM / 13 days ago

UPDATE 1-U.S. natgas futures fall 3%, tie 24-year low with drop in oil prices

 (New throughout, updates prices, market activity and comments to close)
    March 20 (Reuters) - U.S. natural gas futures fell 3% on Friday, led lower by a big drop in U.S.
crude oil prices, and gas tied the 24-year low hit earlier this week, as steps taken to slow the spread
of coronavirus cut into global economic growth and energy demand.
    Traders noted that gas futures fell less than oil because gas demand is expected to rise next week as
pipeline flows to liquefied natural gas (LNG) export terminals increase.
    Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.0 cents,
or 3%, to settle at $1.604 per million British thermal units, tying the September 1995 low hit on
Wednesday. The all-time low for gas futures is $1.04 in January 1992.
    That put the front-month down over 14% this week, its biggest weekly decline since November.
    "It is unclear how low the market can go if demand impacts are sustained for a significant period as
currently seems possible," Daniel Myers, market analyst at Gelber & Associates in Houston, said in a
report.
    He noted there was little demand growth left to support the gas market since most coal-to-gas fuel
switching has already occurred and the power and industrial sectors were expected to consume less gas in
coming months due to economic worries.
    Crude oil prices, meanwhile, fell by the most in a week since 1991 as global
demand dried up due to the coronavirus and as Washington scrambled to respond.
    Looking ahead, the premium of futures for May over April NGJ20-K20 rose to its highest on record
and the premium of calendar 2021 over 2022 rose for a sixth session in a row, the
most since February 2017, on expectations low energy prices will start to boost energy demand.
    Even before the coronavirus started to spread, gas prices were already trading near their lowest in
years as record production and months of mild weather enabled utilities to leave more gas in storage,
making fuel shortages and price spikes unlikely this winter.
    Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in
the U.S. Lower 48 states, including exports, would rise from an average of 104.3 billion cubic feet per
day (bcfd) this week to 104.7 bcfd next week before falling to 103.4 bcfd in two weeks. That compares
with Refinitiv's forecast on Thursday of 104.2 bcfd this week and 103.0 bcfd next week.
    The projected demand increase next week is almost entirely due to an expected increase in gas flows
to LNG export plants. The amount of gas expected to flow to those plants was on track to rise to 9.1 bcfd
on Friday from a five-month low of 6.4 bcfd on Wednesday after fog slowed tanker traffic into Cheniere
Energy Inc's Sabine Pass plant in Louisiana, according to early estimates from Refinitiv. 
                     
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 20      March 13      March 20     average    
                                        (Forecast)      (Actual)                 March 20    
 U.S. natgas storage (bcf):                -22             -9          -39          -40      
                                                                                             
                                                                                             
 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                             240            235          263          250          245
 U.S. GFS CDDs                              29             28           7           17            14
 U.S. GFS TDDs                             269            263          370          267          259
                                                                                             
 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              93.7           94.2         94.0        88.9          76.9
 U.S. Imports from Canada                  6.6            6.8          7.0          8.6          8.5
 U.S. LNG Imports                          0.1            0.0          0.0          0.0          0.2
 Total U.S. Supply                        100.5          101.0        101.0        97.5          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    3.0            2.8          2.7          2.8          2.6
 U.S. Exports to Mexico                    5.6            5.6          5.6          4.8          3.8
 U.S. LNG Exports                          8.0            7.8          9.1          5.4          1.8
 U.S. Commercial                           10.9           11.2         11.2        12.4          12.3
 U.S. Residential                          16.2           16.8         16.9        19.2          19.4
 U.S. Power Plant                          27.9           29.9         28.9        26.1          23.7
 U.S. Industrial                           23.1           23.2         23.2        23.6          22.6
 U.S. Plant Fuel                           4.6            4.7          4.6          4.7          4.7
 U.S. Pipe Distribution                    2.3            2.3          2.3          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    85.0           88.3         87.3        88.4          85.3
 Total U.S. Demand                        101.6          104.3        104.7        101.4         93.5
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.68           1.73                               
 Transco Z6 New York NG-CG-NY-SNL        1.25           1.31                               
 PG&E Citygate NG-CG-PGE-SNL             2.61           2.80                               
 Dominion South NG-PCN-APP-SNL           1.22           1.23                               
 Chicago Citygate NG-CG-CH-SNL           1.54           1.48                               
 Algonquin Citygate NG-CG-BS-SNL         1.38           1.42                               
 SoCal Citygate NG-SCL-CGT-SNL           2.13           2.07                               
 Waha Hub NG-WAH-WTX-SNL                 1.05           0.89                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             16.50          19.50                               
 PJM West EL-PK-PJMW-SNL                21.50          23.50                               
 Ercot North EL-PK-ERTN-SNL             22.50          24.50                               
 Mid C EL-PK-MIDC-SNL                   25.50          27.83                               
 Palo Verde EL-PK-PLVD-SNL              20.25          25.50                               
 SP-15 EL-PK-SP15-SNL                   27.25          28.00                               
 
 (Reporting by Scott DiSavino
Editing by Marguerita Choy and David Gregorio)
  
 
 
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