July 7, 2020 / 2:26 PM / a month ago

UPDATE 2-U.S. natgas climbs to 2-month high on hot weather, pipe shutdown

 (Adds closing prices)
    July 7 (Reuters) - U.S. natural gas futures rose to a two-month high on Tuesday with output on track
to fall by a record amount after a pipe shutdown in West Virginia and on forecasts confirming Monday's
hot weather outlook that will keep air conditioners humming for the next two weeks.
    The price rise comes despite coronavirus demand destruction, stockpiles swelling toward record
highs, and a collapse in liquefied natural gas (LNG) exports to their lowest levels since 2018.
    Front-month gas futures rose 4.6 cents, or 2.5%, to settle at $1.876 per million British
thermal units. That is the highest price since May 7 and up 31% from a near 25-year low of $1.432 hit
about a week ago.
    Looking ahead, futures for the balance of 2020 and calendar 2021 were trading
about 19% and 37%, respectively, over the front-month, on hopes the economy will rebound and energy
demand will increase as state governments lift coronavirus-linked lockdowns.
    U.S. gas production was on track to drop by a record amount on Tuesday to its lowest level since
September 2018 due in part to unplanned work on TC Energy Corp's Mountaineer Xpress pipeline in
West Virginia.
    Overall, however, 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 compared with an
all-time monthly high of 95.4 bcfd in November.
    As the weather heats up, Refinitiv forecasts U.S. demand, including exports, will rise from 88.8
bcfd this week to 91.9 bcfd next week. That is a little lower than its forecasts on Monday.
    Pipeline gas flowing to U.S. LNG export plants averaged just 3.2 bcfd (33% 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 the first time since
August 2019 when its first liquefaction train was still in test mode.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                           Jul 3          June        Jul 3      average    
                                        (Forecast)     26(Actual)                 Jul 3     
 U.S. natgas storage (bcf):                +65            +65          +83         +68      
                                                                                            
                                                                                            
 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                             254            255          227         206          198
 U.S. GFS TDDs                             255            256          229         210          201
                                                                                            
 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           88.4         88.8        90.9         78.1
 U.S. Imports from Canada                  6.4            6.5          6.7         5.8          8.2
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.2
 Total U.S. Supply                         93.8           94.9         95.5        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            5.2          5.4         5.2          4.2
 U.S. LNG Exports                          4.1            3.2          3.5         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           42.3         44.6        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          4.4         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           77.9         80.6        76.3         72.0
 Total U.S. Demand                         86.3           88.8         91.9        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                   1.71           1.58                              
 Transco Z6 New York NG-CG-NY-SNL        1.76           1.49                              
 PG&E Citygate NG-CG-PGE-SNL             2.37           2.01                              
 Dominion South NG-PCN-APP-SNL           1.50           1.30                              
 Chicago Citygate NG-CG-CH-SNL           1.71           1.51                              
 Algonquin Citygate NG-CG-BS-SNL         1.75           1.44                              
 SoCal Citygate NG-SCL-CGT-SNL           1.80           1.36                              
 Waha Hub NG-WAH-WTX-SNL                 1.11           1.01                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             20.25          24.50                              
 PJM West EL-PK-PJMW-SNL                32.25          27.75                              
 Ercot North EL-PK-ERTN-SNL             24.25          30.00                              
 Mid C EL-PK-MIDC-SNL                   13.20           8.50                              
 Palo Verde EL-PK-PLVD-SNL              24.25          22.50                              
 SP-15 EL-PK-SP15-SNL                   25.00          23.75                              
 
 (Reporting by Scott DiSavino; Editing by Bernadette Baum and Leslie Adler)
  
 
 
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