May 14, 2020 / 2:59 PM / 14 days ago

UPDATE 2-U.S. natgas futures rise 4% on smaller than expected storage build

 (Adds closing prices)
    May 14 (Reuters) - U.S. natural gas futures rose 4% on Thursday on a smaller-than-expected storage
build and a slowdown in output as energy firms shut oil wells and slashed spending on new drilling after
crude prices collapsed over the past couple of months due in part to demand destruction from the
coronavirus pandemic. Those oil wells also produce a lot of gas.
    The price increase came despite forecasts for domestic demand and exports to drop as government
lockdowns to stop the spread of the virus cut gas use around the world.
    The U.S. Energy Information Administration said utilities injected 103 billion cubic feet of gas
into storage during the week ended May 8.
    That is slightly less than the 107-bcf build analysts forecast in a Reuters poll and compares with
an increase of 100 bcf during the same week last year and a five-year (2015-19) average build of 85 bcf
for the period.
    The increase during the week ended May 8 boosted stockpiles to 2.422 trillion cubic feet, 20.6%
above the five-year average of 2.009 tcf for this time of year.
    Front-month gas futures for June delivery on the New York Mercantile Exchange rose 6.5 cents,
or 4.0%, to settle at $1.681 per million British thermal units. On Wednesday, the contract closed at its
lowest since April 15.
    The 8% collapse in the Henry Hub in Louisiana briefly pushed the U.S. benchmark below the
front-month Title Transfer Facility (TTF) in the Netherlands for a second day in a row on Thursday. The
TTF front-month has mostly traded at a premium to Henry Hub since April 30, when it closed over the U.S.
contract for the first time in a decade.
    Henry Hub futures, however, continued to trade over TTF in July and August
. Analysts said those higher U.S. prices should prompt buyers of liquefied natural
gas to continue canceling U.S. cargoes in coming months. In April, buyers canceled about 20 U.S. LNG 
cargoes due to be shipped in June.
    Data provider Refinitiv said U.S. LNG exports averaged 7.0 billion cubic feet per day (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.
    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.
    With the weather expected to turn milder, Refinitiv projected demand in the Lower 48 states,
including exports, will fall from an average of 85.5 bcfd this week to 77.8 bcfd next week. That is
lower than Refinitiv's forecasts on Tuesday of 85.7 bcfd this week and 78.8 bcfd next week.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                           May 8        May 1         May 8      average    
                                         (Actual)       (Actual)                  May 8     
 U.S. natgas storage (bcf):                +103           +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                              31             40           75          63           56
 U.S. GFS CDDs                             104            103           78          82           83
 U.S. GFS TDDs                             135            143          153         145          139
                                                                                            
 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           90.3         89.7        89.0         77.0
 U.S. Imports from Canada                  5.9            5.8          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         95.8        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            6.6          6.1         5.8          2.0
 U.S. Commercial                           6.6            7.9          5.3         6.4          5.5
 U.S. Residential                          7.9            10.2         5.5         7.5          6.1
 U.S. Power Plant                          25.8           25.0         26.2        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           72.2         65.0        68.2         64.0
 Total U.S. Demand                         83.2           85.5         77.8        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                   1.56           1.61                              
 Transco Z6 New York NG-CG-NY-SNL        1.19           1.43                              
 PG&E Citygate NG-CG-PGE-SNL             2.50           2.60                              
 Dominion South NG-PCN-APP-SNL           1.18           1.35                              
 Chicago Citygate NG-CG-CH-SNL           1.54           1.63                              
 Algonquin Citygate NG-CG-BS-SNL         1.21           1.47                              
 SoCal Citygate NG-SCL-CGT-SNL           1.72           1.84                              
 Waha Hub NG-WAH-WTX-SNL                 1.38           1.50                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             14.50          15.25                              
 PJM West EL-PK-PJMW-SNL                17.75          19.00                              
 Ercot North EL-PK-ERTN-SNL             22.00          19.25                              
 Mid C EL-PK-MIDC-SNL                   11.56           7.67                              
 Palo Verde EL-PK-PLVD-SNL              12.25           2.75                              
 SP-15 EL-PK-SP15-SNL                   12.00          10.75                              
 
 (Reporting by Scott DiSavino; Editing by Paul Simao, Dan Grebler and Richard Chang)
  
 
 
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