March 11, 2020 / 12:24 PM / a month ago

U.S. natgas futures slip despite higher demand forecasts

    March 11 (Reuters) - U.S. natural gas futures slipped on Wednesday with a decline in oil prices
despite forecasts for a little more gas demand over the next two weeks than previously expected.
    That drop follows a more than 13% jump over the past two days for gas futures on expectations the oil
price collapse earlier in the week would cause drillers to cut back on oil and associated gas production
in shale basins like the Permian in West Texas and eastern New Mexico, allowing demand to absorb some of
the gas supply glut that has built up in recent years. 
    Front-month gas futures for April delivery on the New York Mercantile Exchange fell 3.5 cents,
or 1.8%, to $1.901 per million British thermal units (mmBtu) at 8:00 a.m. EDT (1200 GMT). On Tuesday, the
contract closed near a three-week high.
    Oil prices fell about 3% on Wednesday as Saudi Arabia prepares to boost oil production
capacity for the first time in more than a decade and demand weakened due to the spread of the
coronavirus.
    Despite big gains earlier this week, gas prices were still down 35% since hitting an eight-month high
of $2.905 per mmBtu in early November because near-record production and mild winter weather enabled
utilities to leave more gas in storage, making fuel shortages and price spikes unlikely.
    Data provider Refinitiv projected average demand in the U.S. Lower 48 states, including exports,
would edge up from 100.8 billion cubic feet per day (bcfd) this week to 102.3 bcfd next week. That is a
little higher than Refinitiv's forecast on Tuesday of 99.8 bcfd this week and 101.8 bcfd next week.
    The amount of gas flowing to U.S. LNG export plants was on track to hold at 8.3 bcfd on Wednesday,
the same as Tuesday, according to preliminary data from Refinitiv. That compares with an average of 7.8
bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.
    Traders are watching gas flows to U.S. LNG export plants for declines after customers canceled a
couple of cargoes for April as low prices in Europe and Asia made it uneconomical for
some European customers to lift cargoes. Global LNG prices are low due to warm winters in Europe and
Asia, record-high storage in Europe and lower demand in China related to the coronavirus.
    With demand from U.S. power generators and industrial firms expected to decline or steady in coming
years, producers are counting on LNG exports to maintain their spectacular growth in coming years to
absorb record amounts of gas associated with oil production from shale formations.
    U.S. LNG exports jumped 53% in 2018 and 68% in 2019, and are expected to rise 33% in 2020, according
to federal energy projections.
    U.S. gas production, meanwhile, eased to 93.5 bcfd on Tuesday from 93.7 bcfd on Monday, according to
Refinitiv.
        
                                        Week ended     Week ended    Year ago    Five-year   
                                         March 6        Feb. 28      March 6      average    
                                        (Forecast)      (Actual)                  March 6    
 U.S. natgas storage (bcf):                -63            -109         -164         -99      
                                                                                             
                                                                                             
 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                             237            244          293          280          283
 U.S. GFS CDDs                              26             23           10          14            10
 U.S. GFS TDDs                             263            267          370          294          293
                                                                                             
 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              93.9           93.6         93.6        88.5          76.9
 U.S. Imports from Canada                  7.1            6.7          7.2          8.6          8.5
 U.S. LNG Imports                          0.1            0.1          0.0          0.1          0.2
 Total U.S. Supply                        101.2          100.4        100.8        97.2          85.6
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.8            3.0          3.0          3.1          2.6
 U.S. Exports to Mexico                    5.6            5.5          5.6          4.8          3.8
 U.S. LNG Exports                          8.1            8.0          8.6          5.1          1.8
 U.S. Commercial                           13.2           10.7         11.0        13.4          12.3
 U.S. Residential                          20.5           15.9         16.6        21.7          19.4
 U.S. Power Plant                          28.7           27.6         27.5        25.1          23.7
 U.S. Industrial                           23.8           23.1         23.1        23.4          22.6
 U.S. Plant Fuel                           4.6            4.6          4.6          4.6          4.7
 U.S. Pipe Distribution                    2.5            2.2          2.3          2.3          2.5
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    93.4           84.3         85.2        90.6          85.3
 Total U.S. Demand                        109.9          100.8        102.3        103.6         93.5
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.91           1.74                               
 Transco Z6 New York NG-CG-NY-SNL        1.56           1.42                               
 PG&E Citygate NG-CG-PGE-SNL             2.62           2.63                               
 Dominion South NG-PCN-APP-SNL           1.49           1.35                               
 Chicago Citygate NG-CG-CH-SNL           1.69           1.54                               
 Algonquin Citygate NG-CG-BS-SNL         1.65           1.56                               
 SoCal Citygate NG-SCL-CGT-SNL           2.25           2.09                               
 Waha Hub NG-WAH-WTX-SNL                 0.93           0.40                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             19.00          17.75                               
 PJM West EL-PK-PJMW-SNL                23.18          19.50                               
 Ercot North EL-PK-ERTN-SNL             26.00          24.00                               
 Mid C EL-PK-MIDC-SNL                   23.38          30.38                               
 Palo Verde EL-PK-PLVD-SNL              27.75          34.50                               
 SP-15 EL-PK-SP15-SNL                   32.75          32.75                               
 
 (Reporting by Scott DiSavino; Editing by Bernadette Baum)
  
 
 
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