July 10, 2020 / 7:11 PM / a month ago

UPDATE 1-U.S. natgas futures rise as hot weather boosts air conditioning demand

 (Adds closing prices)
    July 10 (Reuters) - U.S. natural gas futures climbed on Friday on forecasts hotter-than-normal
weather will keep air conditioners humming through late July. 
    The higher price move comes despite a slow increase in output and a drop in liquefied natural gas
(LNG) exports to their lowest since early 2018.
    Front-month gas futures rose 2.6 cents, or 1.5%, to settle at $1.805 per million British
thermal units. For the week, the contract gained about 4%, putting it up for a second week in a row
after soaring 16% last week.
    Traders predicted that Tropical Storm Fay, which is heading for the New York City area, would likely
have little impact on gas demand.
    Refinitiv said production in the Lower 48 U.S. states averaged 88.1 billion cubic feet per day
(bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time
monthly high of 95.4 bcfd in November.
    As the weather heats up, Refinitiv forecast U.S. demand, including exports, will rise from 89.3 bcfd
this week to 91.4 bcfd next week and 93.3 bcfd in two weeks.
    Pipeline gas flowing to U.S. LNG export plants averaged just 3.1 bcfd (32% utilization) so far in
July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February.
Utilization was about 90% in 2019. Flows to Freeport LNG in Texas fell to zero for a fourth day in a row
the first time since July 2019 when its first liquefaction train was still in test mode.
    U.S. pipeline exports, meanwhile, were mixed.
    Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June
but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged
5.4 bcfd for a second month in a row, which is down from a record 5.6 bcfd in March.
        
                                       Week ended      Week ended    Year ago   Five-year   
                                          Jul 10         Jul 3        Jul 10     average    
                                        (Forecast)      (Actual)                  Jul 10    
 U.S. natgas storage (bcf):                +43            +56          +67         +63      
                                                                                            
                                                                                            
 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                              1              1            2           4            3
 U.S. GFS CDDs                             257            255          227         206          200
 U.S. GFS TDDs                             258            256          229         210          203
                                                                                            
 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              87.4           88.2         87.4        90.9         78.1
 U.S. Imports from Canada                  6.4            6.6          6.8         5.8          8.2
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.2
 Total U.S. Supply                         93.8           94.8         94.2        96.7         86.5
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.4          2.4         2.5          2.0
 U.S. Exports to Mexico                    5.4            5.4          5.5         5.2          4.2
 U.S. LNG Exports                          4.1            3.1          3.2         5.9          2.1
 U.S. Commercial                           4.3            4.3          4.3         4.4          4.4
 U.S. Residential                          3.5            3.5          3.5         3.6          3.5
 U.S. Power Plant                          38.9           42.7         44.3        40.3         37.2
 U.S. Industrial                           21.3           21.3         21.5        21.4         20.3
 U.S. Plant Fuel                           4.3            4.4          4.3         4.4          4.4
 U.S. Pipe Distribution                    2.0            2.1          2.1         2.1          2.1
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    74.4           78.4         80.2        76.3         72.0
 Total U.S. Demand                         86.3           89.3         91.4        89.9         80.3
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.88           1.78                              
 Transco Z6 New York NG-CG-NY-SNL        1.75           1.76                              
 PG&E Citygate NG-CG-PGE-SNL             2.68           2.64                              
 Dominion South NG-PCN-APP-SNL           1.38           1.34                              
 Chicago Citygate NG-CG-CH-SNL           1.80           1.81                              
 Algonquin Citygate NG-CG-BS-SNL         1.69           1.70                              
 SoCal Citygate NG-SCL-CGT-SNL           2.25           2.01                              
 Waha Hub NG-WAH-WTX-SNL                 1.65           1.51                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             22.50          30.75                              
 PJM West EL-PK-PJMW-SNL                32.60          34.75                              
 Ercot North EL-PK-ERTN-SNL             35.00          24.00                              
 Mid C EL-PK-MIDC-SNL                   16.39          24.75                              
 Palo Verde EL-PK-PLVD-SNL              43.50          40.58                              
 SP-15 EL-PK-SP15-SNL                   40.50          31.00                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski and David Gregorio)
  
 
 
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