May 14, 2020 / 1:39 PM / 14 days ago

U.S. natgas futures rise from 4-week low as output slows

    May 14 (Reuters) - U.S. natural gas futures on Thursday edged up from a four-week low in the prior
session on slowing output after energy firms shut oil wells and slashed spending on new drilling because
crude prices collapsed due to demand destruction from the coronavirus pandemic. Those oil wells also
produce a lot of gas.
    The small gain came ahead of the release of a federal report that is expected to show a
bigger-than-usual weekly storage build and despite bearish forecasts for domestic demand and exports to
drop as government lockdowns to stop the spread of the novel coronavirus cut gas use around the world.
    Analysts said utilities likely injected 107 billion cubic feet (bcf) of gas into storage during the
week ended May 8. That 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.
    If correct, the increase would bring stockpiles to 2.426 trillion cubic feet (tcf), 20.8% above the
five-year average of 2.009 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 1.4 cents,
or 0.9%, to $1.630 per million British thermal units at 9:12 a.m. EDT (1312 GMT). On Wednesday, the
contract closed at its lowest since April 15.
    The 11% collapse in the Henry Hub in Louisiana 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, which was the first time it closed over the
U.S. contract 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 (LNG) to continue canceling U.S. cargoes in coming months. In April, buyers canceled about 20 U.S.
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    
                                        (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                              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)
  
 
 
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