April 27, 2020 / 2:41 PM / a month ago

U.S. natgas futures slump nearly 9% on demand concerns

    April 27 (Reuters) - U.S. natural gas futures dropped as much as 8.6% on Monday to their lowest in
over a week, as forecasts of milder weather coupled with coronavirus-led shutdowns weighed on demand.
    One day ahead of the expiry date, front-month gas futures for May delivery on the New York
Mercantile Exchange fell 9.5 cents, or 5.4%, to $1.651 per million British thermal units at 10:25 a.m.
EDT (1425 GMT). Prices earlier dropped to their lowest since April 16 at $1.593.
    "Natural gas is down as demand weakness seems to be overshadowing production cuts. The weather
outlook is in goldilocks-ville, not to hot and not too cold, just right for storage increases," said Phil
Flynn, senior analyst at Price Futures Group in Chicago.
    Demand in the Lower 48 states, including exports, is expected to decline as the weather turns milder,
falling from 87 bcfd this week to 84.8 bcfd next, according to Refinitiv.
    Meanwhile, oil prices slumped again on Monday on concerns over scarce storage capacity, especially in
the United States, and global economic doldrums from the coronavirus pandemic.
    "Natural gas (is) succumbing to oil plunge with colder than previously expected Midwest temperatures
unable to offer much support," Jim Ritterbusch, president of Ritterbusch and Associates in Galena,
Illinois, said in a note.
    Gas output in the Lower 48 states fell to a 11-week low of 91.7 bcfd on Thursday, and stood at 92.0
bcfd on Sunday, according to data provider Refinitiv.
    Last week's report from the U.S. Energy Information Administration (EIA) showed utilities injected 43
billion cubic feet (bcf) of gas into storage during the week ended April 17. The increase boosted
stockpiles to 2.140 trillion cubic feet (tcf), 20.5% above the five-year average of 1.776 tcf for this
time of year.
    Looking ahead, gas futures for the balance of 2020 and calendar 2021 were trading
higher than the front-month on expectations demand will jump as the economy snaps back once governments
loosen travel and work restrictions.
    In the long-term, the EIA projected the reduction in drilling will cut gas production to an annual
average of 91.7 billion cubic feet per day (bcfd) in 2020 and 87.5 bcfd in 2021 from a record 92.2 bcfd
in 2019. That would be the first annual production decline since 2016 and the first time since 2005 that
output fell for two consecutive years.
       
          
                                       Week ended      Week ended    Year ago    Five-year   
                                           April       April 17      April 24     average    
                                       24(Forecast)     (Actual)                 April 24    
 U.S. natgas storage (bcf):                +53            +43          +114         +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                              96            117          110          97            99
 U.S. GFS CDDs                              55             61           55          57            49
 U.S. GFS TDDs                             151            178          165          154          148
                                                                                             
 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              92.6           91.9         92.1        89.8          77.2
 U.S. Imports from Canada                  5.9            6.1          6.4          7.8          8.1
 U.S. LNG Imports                          0.0            0.0          0.0          0.0          0.1
 Total U.S. Supply                         98.5           98.0         98.5        97.6          85.4
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.7          2.5          2.7          2.3
 U.S. Exports to Mexico                    4.6            4.7          4.7          4.0          3.7
 U.S. LNG Exports                          8.1            7.6          8.1          5.1          1.8
 U.S. Commercial                           9.1            7.3          6.7          6.5          8.2
 U.S. Residential                          12.5           9.2          8.0          7.7          11.3
 U.S. Power Plant                          27.0           26.9         26.3        25.7          21.5
 U.S. Industrial                           22.7           22.1         21.9        21.8          23.0
 U.S. Plant Fuel                           4.6            4.5          4.5          4.6          4.6
 U.S. Pipe Distribution                    2.1            1.9          1.8          2.1          2.2
 U.S. Vehicle Fuel                         0.1            0.1          0.1          0.1          0.1
 Total U.S. Consumption                    78.0           72.1         69.5        68.5          70.9
 Total U.S. Demand                         93.1           87.0         84.8        80.3          78.7
                                                                                             
                                                                                             
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                          
 Hub                                   Current Day     Prior Day                             
 Henry Hub NG-W-HH-SNL                   1.81           1.86                               
 Transco Z6 New York NG-CG-NY-SNL        1.65           1.79                               
 PG&E Citygate NG-CG-PGE-SNL             2.39           2.34                               
 Dominion South NG-PCN-APP-SNL           1.58           1.67                               
 Chicago Citygate NG-CG-CH-SNL           1.75           1.83                               
 Algonquin Citygate NG-CG-BS-SNL         1.80           1.97                               
 SoCal Citygate NG-SCL-CGT-SNL           1.52           1.80                               
 Waha Hub NG-WAH-WTX-SNL                 0.75           1.22                               
                                                                                             
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                        
 Hub                                   Current Day     Prior Day                             
 New England EL-PK-NPMS-SNL             21.50          22.50                               
 PJM West EL-PK-PJMW-SNL                20.75          21.25                               
 Ercot North EL-PK-ERTN-SNL             23.25          23.00                               
 Mid C EL-PK-MIDC-SNL                   12.17          17.48                               
 Palo Verde EL-PK-PLVD-SNL              25.81          21.00                               
 SP-15 EL-PK-SP15-SNL                   22.75          21.75                               
 

 (Reporting by Sumita Layek in Bengaluru; Editing by Steve Orlofsky)
  
 
 
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