U.S. natgas futures drop 5% to 19-month low on less cold forecasts
Jan 25 (Reuters) - U.S. natural gas futures dropped about 5% to a 19-month low on Wednesday on forecasts for
less cold weather and lower heating demand next week than previously expected and a growing belief in the market that
Freeport LNG's liquefied natural gas (LNG) export plant in Texas will not actually restart for weeks or months.
That price drop came despite bullish forecasts calling for more gas demand this week than previously expected and
a drop in output over the past couple of days as cold weather freezes wells in some producing basins.
Earlier this week, Freeport said its export plant was ready to begin the process of exiting a seven-month outage,
pending regulatory approval. But some analysts have stuck with their earlier estimates that it will take until
February, March or even later for the plant to actually start pulling in big amounts of pipeline gas.
Freeport, the second-biggest U.S. LNG exporter, is important because the market expects gas prices and demand to
rise once the plant restarts. The facility, which shut in a fire on June 8, 2022, can pull in about 2.1 billion cubic
feet per day (bcfd) of gas and turn it into LNG when operating at full power.
That is about 2% of what U.S. gas producers pull out of the ground each day.
Even though vessels have turned away from Freeport in recent weeks, several tankers were still waiting in the Gulf
of Mexico to pick up LNG from the plant, including Prism Diversity since around Oct. 28, Prism Courage since around
Nov. 4, Prism Agility since around Jan. 2 and Corcovado LNG since around Jan. 22.
In addition, other ships were sailing toward Freeport with both Prism Brilliance and Kmarin Diamond expected to
arrive around Jan. 26.
Front-month gas futures for February delivery fell 16.1 cents, or 4.9%, to $3.097 per million British
thermal units (mmBtu) at 8:15 a.m. EST (1315 GMT), putting the contract on track for its lowest close since June 7,
2021.
That price drop pushed the front-month back into technically oversold territory with a relative strength index
(RSI) below 30 for the first time in three days.
U.S. GAS OUTPUT
Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 98.6 bcfd so far in January,
up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022.
On a daily basis, however, output was on track to drop about 1.7 bcfd over the past two days to a preliminary
three-week low of 97.4 bcfd on Wednesday as cold weather starts to cause wells to freeze - known as freeze-offs in the
energy industry - in some producing basins like the Bakken in North Dakota, the Permian in Texas and Appalachia in
Pennsylvania.
Even though the forecasts call for less cold weather over the next two weeks than previously expected,
temperatures are still expected to be lower next week than this week.
With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would jump from 130.9 bcfd this
week to 138.7 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Tuesday, while the
forecast for next week was lower.
The average amount of gas flowing to U.S. LNG export plants rose to 12.3 bcfd so far in January, up from 11.9 bcfd
in December. That compares with a monthly record of 12.9 bcfd in March 2022.
The seven big U.S. export plants, including Freeport, can turn about 13.8 bcfd of gas into LNG.
Week ended Week ended Year ago Five-year
Jan 20 Jan 13 Jan 20 average
(Forecast) (Actual) Jan 20
U.S. weekly natgas storage change (bcf): -78 +82 -217 -185
U.S. total natgas in storage (bcf): 2,742 2,820 2,622 2,601
U.S. total storage versus 5-year average +5.4% +1.2%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2022 (2018-2022)
Henry Hub 3.14 3.26 4.26 6.54 3.60
Title Transfer Facility (TTF) 18.15 18.80 28.25 40.50 14.39
Japan Korea Marker (JKM) 22.13 23.26 28.53 34.11 14.31
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 477 480 508 430 433
U.S. GFS CDDs 4 3 2 4 3
U.S. GFS TDDs 481 483 510 434 436
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 98.9 98.6 98.9 93.5 88.8
U.S. Imports from Canada 8.4 8.3 9.0 10.2 9.4
U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4
Total U.S. Supply 107.3 107.0 108.0 103.9 98.6
U.S. Demand (bcfd)
U.S. Exports to Canada 2.8 2.6 2.6 2.5 2.8
U.S. Exports to Mexico 5.3 5.3 5.2 6.0 5.3
U.S. LNG Exports 12.4 12.5 12.3 12.6 7.2
U.S. Commercial 14.8 16.5 18.7 20.4 17.1
U.S. Residential 24.5 27.8 31.9 35.0 29.8
U.S. Power Plant 29.5 32.7 33.3 32.3 28.5
U.S. Industrial 24.6 25.7 26.5 26.6 25.6
U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9
U.S. Pipe Distribution 2.7 2.9 3.2 2.9 2.4
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 101.1 110.5 118.5 122.2 108.4
Total U.S. Demand 121.6 130.9 138.7 143.3 123.7
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jan 27 Jan 20 Jan 13 Jan 6 Dec 30
Wind 9 13 11 12 11
Solar 2 2 2 2 2
Hydro 7 7 7 7 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 39 36 38 36 35
Coal 19 18 19 18 23
Nuclear 21 21 21 23 19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 3.35 3.43
Transco Z6 New York 3.15 3.26
PG&E Citygate 18.50 15.71
Eastern Gas (old Dominion South) 2.62 2.71
Chicago Citygate 3.12 3.20
Algonquin Citygate 3.80 3.36
SoCal Citygate 18.95 16.81
Waha Hub 2.79 2.74
AECO 2.79 2.80
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 53.25 47.25
PJM West 43.50 45.50
Ercot North 32.75 35.50
Mid C 157.00 157.75
Palo Verde 187.00 135.50
SP-5 149.50 142.00
(Reporting by Scott DiSavino; Editing by Andrea Ricci)
Log In Required
Line of Credit Log In Required
