July 8, 2020 / 1:02 PM / a month ago

U.S. natgas slide on smaller than expected output drop, less cooling demand

    July 8 (Reuters) - U.S. natural gas futures slipped on Wednesday from a two-month high in the prior
session on a forecast small decline in cooling demand next week, a continued drop in liquefied natural
gas (LNG) exports and a smaller than earlier expected drop in output due to an unplanned pipe work.
    Front-month gas futures fell 4.6 cents, or 2.5%, to $1.830 per million British thermal units
at 8:31 a.m. EDT (1231 GMT). On Tuesday, the contract closed at its highest since May 7.
    Looking ahead, futures for the balance of 2020 and calendar 2021 were trading
about 22% and 43%, respectively, over the front-month, on hopes energy demand will rise as the economy
rebounds after state governments lift coronavirus-linked lockdowns.
    Refinitiv said production in the Lower 48 U.S. states averaged 88.2 billion cubic feet per day
(bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June compared with an all-time monthly
high of 95.4 bcfd in November.
    U.S. gas production on Wednesday was on track to drop to its lowest since mid June following
revisions of pipeline flows on Tuesday due to unplanned work on TC Energy Corp's Mountaineer
Xpress pipeline in West Virginia that will continue through at least July 13. On Tuesday, early pipeline
flow data showed output was expected to drop by a record 4.2 bcfd. In reality, however, output fell by
just 1.9 bcfd, which is still high but only the most in a day since May 1.
    As the weather heats up, Refinitiv forecasts U.S. demand, including exports, will rise from 89.1
bcfd this week to 91.0 bcfd next week. The forecast for next week is a little lower than its forecast on
Tuesday.
    Pipeline gas flowing to U.S. LNG export plants averaged just 3.1 bcfd (32% utilization) so far in
July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February.
Utilization was about 90% in 2019. Flows to Freeport LNG in Texas fell to zero for a second day in a row
the first time since August 2019 when its first liquefaction train was still in test mode.
    
                                       Week ended      Week ended    Year ago   Five-year   
                                           Jul 3          June        Jul 3      average    
                                        (Forecast)     26(Actual)                 Jul 3     
 U.S. natgas storage (bcf):                +65            +65          +83         +68      
                                                                                            
                                                                                            
 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                              1              1            2           4            3
 U.S. GFS CDDs                             252            254          227         206          199
 U.S. GFS TDDs                             253            255          229         210          202
                                                                                            
 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              87.4           88.3         88.4        90.9         78.1
 U.S. Imports from Canada                  6.4            6.5          6.7         5.8          8.2
 U.S. LNG Imports                          0.0            0.0          0.0         0.0          0.2
 Total U.S. Supply                         93.8           94.8         95.1        96.7         86.5
 
 U.S. Demand (bcfd)
 U.S. Exports to Canada                    2.4            2.4          2.4         2.5          2.0
 U.S. Exports to Mexico                    5.4            5.3          5.4         5.2          4.2
 U.S. LNG Exports                          4.1            3.1          3.3         5.9          2.1
 U.S. Commercial                           4.3            4.3          4.3         4.4          4.4
 U.S. Residential                          3.5            3.5          3.5         3.6          3.5
 U.S. Power Plant                          38.9           42.6         44.0        40.3         37.2
 U.S. Industrial                           21.3           21.3         21.5        21.4         20.3
 U.S. Plant Fuel                           4.3            4.4          4.4         4.4          4.4
 U.S. Pipe Distribution                    2.0            2.1          2.1         2.1          2.1
 U.S. Vehicle Fuel                         0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                    74.4           78.3         79.9        76.3         72.0
 Total U.S. Demand                         86.3           89.1         91.0        89.9         80.3
                                                                                            
                                                                                            
 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                         
 Hub                                   Current Day     Prior Day                            
 Henry Hub NG-W-HH-SNL                   1.76           1.71                              
 Transco Z6 New York NG-CG-NY-SNL        1.78           1.76                              
 PG&E Citygate NG-CG-PGE-SNL             2.62           2.37                              
 Dominion South NG-PCN-APP-SNL           1.34           1.50                              
 Chicago Citygate NG-CG-CH-SNL           1.80           1.71                              
 Algonquin Citygate NG-CG-BS-SNL         1.69           1.75                              
 SoCal Citygate NG-SCL-CGT-SNL           1.94           1.80                              
 Waha Hub NG-WAH-WTX-SNL                 1.45           1.11                              
                                                                                            
 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                       
 Hub                                   Current Day     Prior Day                            
 New England EL-PK-NPMS-SNL             16.25          20.25                              
 PJM West EL-PK-PJMW-SNL                27.75          32.25                              
 Ercot North EL-PK-ERTN-SNL             22.88          24.25                              
 Mid C EL-PK-MIDC-SNL                   14.25          13.20                              
 Palo Verde EL-PK-PLVD-SNL              25.00          24.25                              
 SP-15 EL-PK-SP15-SNL                   25.75          25.00                              
 
 (Reporting by Scott DiSavino
Editing by Nick Zieminski)
  
 
 
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