May 13, 2020 / 7:28 PM / 20 days ago

UPDATE 1-U.S. natgas futures fall to 4-week low on coronavirus demand destruction

 (Adds closing prices)
    May 13 (Reuters) - U.S. natural gas futures fell to a four-week low on Wednesday on forecasts for
domestic demand and exports to drop as businesses remain closed due to government lockdowns to stop the
spread of the coronavirus.
    That decline came despite expectations output will slow as a collapse in oil prices due to the
pandemic prompted energy firms to shut oil wells and slash spending on new drilling. Those oil wells
also produce a lot of gas.
    Front-month gas futures for June delivery on the New York Mercantile Exchange fell 10.4
cents, or 6.0%, to settle at $1.616 per million British thermal units, their lowest close since April
15.
    Despite the decline, the front-month at the Henry Hub benchmark in Louisiana has traded higher than
the Title Transfer Facility (TTF) in the Netherlands since late April. Henry
Hub futures were also trading higher than TTF in July and August
.
    Analysts said higher U.S. prices should prompt buyers of liquefied natural gas (LNG) to cancel more
U.S. cargoes in coming months. In April, buyers canceled about 20 U.S. cargoes due to be shipped in
June.
    Looking ahead, U.S. gas futures for the balance of 2020 and calendar 2021 were
trading higher than the front-month on expectations demand will increase once governments loosen
coronavirus travel and work restrictions.
    The U.S. Energy Information Administration projected gas production will fall to an annual average
of 89.8 billion cubic feet per day (bcfd) in 2020 and 84.9 bcfd in 2021 from a record 92.2 bcfd in 2019
due to the reduction in drilling.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states has fallen to 90.2 bcfd
so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4
bcfd in November.
    EIA projected coronavirus lockdowns will cut U.S. gas use - not including exports - to an average of
81.7 bcfd in 2020 and 79.2 bcfd in 2021 from a record 85.0 bcfd in 2019.
    With the weather expected to turn milder, Refinitiv projected demand in the Lower 48 states,
including exports, will fall from an average of 85.7 bcfd this week to 78.8 bcfd next week. That is
similar to Refinitiv's forecasts on Tuesday.
    Even though the coronavirus is reducing global gas use, the EIA still expects U.S. exports to hit
record highs in coming years as more LNG export plants and pipelines enter service. Still, the agency
has reduced its projections on the pace of that growth due to the pandemic.
    Refinitiv said U.S. LNG exports averaged 7.2 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 8        May 1         May 8      average    
                                        (Forecast)      (Actual)                  May 8     
 U.S. natgas storage (bcf):                +107           +109         +100        +85      
                                                                                            
                                                                                            
 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                              40             47           75          63           58
 U.S. GFS CDDs                             103            101           78          82           80
 U.S. GFS TDDs                             143            148          153         145          138
                                                                                            
 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              90.2           90.2         89.8        89.0         77.0
 U.S. Imports from Canada                  5.9            5.9          6.1         7.6          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         96.1           96.1         95.9        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.5            2.1          2.1         2.6          1.9
 U.S. Exports to Mexico                    4.5            4.6          4.6         4.6          3.9
 U.S. LNG Exports                          7.3            6.7          6.6         5.8          2.0
 U.S. Commercial                           6.6            7.9          5.3         6.4          5.5
 U.S. Residential                          7.9            10.3         5.5         7.5          6.1
 U.S. Power Plant                          25.8           24.9         26.7        25.8         25.3
 U.S. Industrial                           22.1           22.6         21.6        22.0         20.6
 U.S. Plant Fuel                           4.5            4.5          4.4         4.5          4.5
 U.S. Pipe Distribution                    1.8            1.9          1.7         1.9          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    68.9           72.3         65.5        68.2         64.0
 Total U.S. Demand                         83.2           85.7         78.8        81.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.61           1.70                              
 Transco Z6 New York NG-CG-NY-SNL        1.43           1.47                              
 PG&E Citygate NG-CG-PGE-SNL             2.60           2.61                              
 Dominion South NG-PCN-APP-SNL           1.35           1.39                              
 Chicago Citygate NG-CG-CH-SNL           1.63           1.74                              
 Algonquin Citygate NG-CG-BS-SNL         1.47           1.56                              
 SoCal Citygate NG-SCL-CGT-SNL           1.84           1.98                              
 Waha Hub NG-WAH-WTX-SNL                 1.50           1.48                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             15.25          15.50                              
 PJM West EL-PK-PJMW-SNL                19.00          20.00                              
 Ercot North EL-PK-ERTN-SNL             19.25          19.00                              
 Mid C EL-PK-MIDC-SNL                    7.67          12.08                              
 Palo Verde EL-PK-PLVD-SNL               2.75           2.75                              
 SP-15 EL-PK-SP15-SNL                   10.75          14.00                              
 
 (Reporting by Scott DiSavino; Editing by Andrea Ricci)
  
 
 
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