May 7, 2020 / 1:00 PM / 17 days ago

U.S. natgas futures rise ahead of storage report on forecasts for more demand

    May 7 (Reuters) - U.S. natural gas futures rose almost 2% on Thursday on forecasts for more demand
over the next two weeks than previously expected.
    That price move came ahead of the release of a federal report expected to show a bigger-than-usual
storage build last week.
    Analysts said utilities likely injected 106 billion cubic feet (bcf) of gas into storage during the
week ended May 1. That compares with an increase of 96 bcf during the same week last year and a
five-year (2015-19) average build of 74 bcf for the period.
    If correct, the increase would bring stockpiles to 2.315 trillion cubic feet (tcf), 20.3% above the
five-year average of 1.924 tcf for this time of year.
    The U.S. Energy Information Administration (EIA) will release its weekly storage report at 10:30
a.m. EDT (1430 GMT) on Thursday.
    Front-month gas futures for June delivery on the New York Mercantile Exchange rose 3.4 cents,
or 1.8%, to $1.978 per million British thermal units at 8:46 a.m. EDT.
    This has been a volatile week for U.S. gas. Prices jumped to a 16-week high on Tuesday after a big
pipe shut and slowing output, but fell almost 9% on Wednesday, the biggest percentage
decline in over a year, as government lockdowns to stop the coronavirus spread cause businesses to use
less gas and exports to drop.
    That price increase on Tuesday briefly made the U.S. front-month the most expensive of the world's
major benchmarks for the first time ever ahead of the Title Transfer Facility (TTF) in the
Netherlands and the Japan/Korea Marker (JKM), both of which are trading near record lows. The
decline on Wednesday, however, allowed JKM to return to its premium over Henry Hub. The U.S. contract
continues to trade over TTF for June and all of the summer forwards.
    Analysts said high U.S. gas prices and low prices elsewhere in the world could prompt buyers of U.S.
liquefied natural gas (LNG) to cancel more cargoes in coming months.
    Looking ahead, U.S. gas futures for the balance of 2020 and calendar 2021 are
trading higher than the front-month on expectations demand will jump once governments loosen travel and
work restrictions.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states has fallen to 90.0 bcfd
so far in May, down from an eight-month low of 92.8 bcfd in April and an all-time monthly high of 95.4
bcfd in November.
    With even cooler weather coming, Refinitiv projected demand in the Lower 48 states, including
exports, would rise from an average of 83.7 bcfd this week to 87.6 bcfd next week. That is higher than
Refinitiv's forecasts on Wednesday of 82.9 bcfd this week and 85.4 bcfd next week.
    Refinitiv said U.S. LNG exports have averaged 7.0 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 1        Apr 24        May 1      average    
                                        (Forecast)      (Actual)                  May 1     
 U.S. natgas storage (bcf):                +106           +70          +96         +74      
                                                                                            
                                                                                            
 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                             101            101           87          81           72
 U.S. GFS CDDs                              70             66           59          67           68
 U.S. GFS TDDs                             171            167          146         128          140
                                                                                            
 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              91.9           90.0         89.7        88.9         77.0
 U.S. Imports from Canada                  5.9            5.9          6.3         7.7          7.8
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                         97.8           95.9         96.0        96.6         84.9
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            2.5          2.5         2.5          1.9
 U.S. Exports to Mexico                    4.7            4.4          4.5         4.5          3.9
 U.S. LNG Exports                          7.5            7.3          7.5         5.5          2.0
 U.S. Commercial                           7.3            6.6          8.1         6.1          5.5
 U.S. Residential                          9.2            7.8          10.6        6.9          6.1
 U.S. Power Plant                          26.1           26.4         25.2        26.4         25.3
 U.S. Industrial                           22.2           22.1         22.7        21.9         20.6
 U.S. Plant Fuel                           4.5            4.4          4.4         4.5          4.5
 U.S. Pipe Distribution                    1.9            1.8          1.9         1.8          1.9
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    71.5           69.4         73.1        67.7         64.0
 Total U.S. Demand                         86.4           83.7         87.6        80.2         71.8
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.90           1.93                              
 Transco Z6 New York NG-CG-NY-SNL        1.44           1.63                              
 PG&E Citygate NG-CG-PGE-SNL             2.86           2.95                              
 Dominion South NG-PCN-APP-SNL           1.42           1.49                              
 Chicago Citygate NG-CG-CH-SNL           1.89           1.97                              
 Algonquin Citygate NG-CG-BS-SNL         1.60           1.76                              
 SoCal Citygate NG-SCL-CGT-SNL           2.30           2.23                              
 Waha Hub NG-WAH-WTX-SNL                 1.76           1.77                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             18.75          20.00                              
 PJM West EL-PK-PJMW-SNL                25.00          23.48                              
 Ercot North EL-PK-ERTN-SNL             16.50          22.00                              
 Mid C EL-PK-MIDC-SNL                   18.50          16.64                              
 Palo Verde EL-PK-PLVD-SNL              27.25          20.00                              
 SP-15 EL-PK-SP15-SNL                   29.00          21.75                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski)
  
 
 
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