U.S. natgas drops 6% to 21-month low on milder weather forecasts
Jan 30 (Reuters) - U.S. natural gas futures dropped about 6% to a 21-month low on Monday on milder weather
forecasts that should cut expected heating demand through the middle of February.
Gas prices have also been pressured by the growing belief that more than enough gas was in storage for the rest of
the winter and that Freeport LNG's liquefied natural gas (LNG) export plant in Texas would not start pulling in big
amounts of gas until at least March.
On its first day as the front-month, gas futures for March delivery fell 17.2 cents, or 6.0%, from where
the March contract closed on Friday to settle at $2.677 per million British thermal units (mmBtu), their
lowest close since April 2021.
The front-month was down about 14% from where the February contract closed when it was the front-month on
Friday. That would be its biggest daily percentage loss since dropping about 17% in June 2022, pushing the contract
back into oversold territory with a relative strength index (RSI) below 30 for the 14th time this year.
Meteorologists forecast temperatures across much of the lower 48 U.S. states would remain mostly colder than
normal through Feb. 5, then turn warmer than normal through at least Feb. 14.
With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 133.3 billion
cubic feet per day (bcfd) this week to 129.9 bcfd next week, sharply down from Refinitiv's outlook on Friday.
That should allow utilities to continue pulling less gas from storage for a fourth or fifth week in a row.
EIA/GAS]
The biggest wild card in the gas market remains when Freeport's export plant will exit a seven-month outage caused
by a fire in June 2022. Freeport is the second-biggest U.S. LNG export plant, and traders expect prices to rise once
it starts pulling in big amounts of gas, boosting demand for the fuel. The plant can pull in about 2.1 bcfd of gas
daily, about 2% of what U.S. gas producers pull from the ground.
Last week, federal regulators approved Freeport's plan to start cooling down parts of the plant. That early step
in the restart process will not result in big gas flows anytime soon.
"In order for gas market bulls to regain any sort of meaningful traction ... the Freeport facility needs to have
volumes back at regular (full) capacity," analysts at energy consulting firm Gelber & Associates said in a note.
Freeport still has to go back to regulators to get permission to restart the liquefaction trains that turn the
gas into LNG for export.
Several analysts have said they do not expect much LNG production at Freeport until March or later.
JERA, one of Freeport's five customers, said it was not counting on getting LNG from the plant by the end of
March.
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 Courage (since around Nov. 4), Prism Agility (Jan. 2),
Corcovado LNG (Jan. 22), Prism Brilliance (Jan. 26) and Kmarin Diamond (Jan. 26).
There are also a couple of vessels on their way to Freeport, including LNG Rosenrot (expected to arrive around
Feb. 14) and Seapeak Bahrain (Feb. 20).
Week ended Week ended Year ago Five-year
Jan 27 Jan 20 Jan 27 average
(Forecast) (Actual) Jan 27
U.S. weekly natgas storage change (bcf): -138 -91 -261 -181
U.S. total natgas in storage (bcf): 2,591 2,729 2,361 2,420
U.S. total storage versus 5-year average +7.1 +4.9%
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 2.73 2.85 4.26 6.54 3.60
Title Transfer Facility (TTF) 18.20 17.28 28.25 40.50 14.39
Japan Korea Marker (JKM) 19.50 20.17 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 417 448 452 420 423
U.S. GFS CDDs 5 4 3 5 4
U.S. GFS TDDs 459 452 455 425 435
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 98.5 97.5 97.9 91.7 88.8
U.S. Imports from Canada 8.3 8.5 8.3 10.2 9.4
U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4
Total U.S. Supply 106.8 106.0 106.2 102.1 98.6
U.S. Demand (bcfd)
U.S. Exports to Canada 2.6 2.2 2.3 2.2 2.8
U.S. Exports to Mexico 5.3 5.1 5.2 6.0 5.3
U.S. LNG Exports 12.5 12.4 12.0 12.3 7.2
U.S. Commercial 16.5 17.7 17.2 19.4 17.1
U.S. Residential 27.9 30.2 28.6 33.3 29.8
U.S. Power Plant 32.3 31.6 31.2 29.6 28.5
U.S. Industrial 25.7 26.1 25.5 26.0 25.6
U.S. Plant Fuel 4.9 4.8 4.8 4.9 4.9
U.S. Pipe Distribution 2.9 3.0 2.9 2.9 2.4
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 110.4 113.5 110.4 116.2 108.4
Total U.S. Demand 130.8 133.3 129.9 136.7 123.7
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Feb 3 Jan 27 Jan 20 Jan 13 Jan 6
Wind 16 11 13 11 12
Solar 3 2 2 2 2
Hydro 7 7 7 7 7
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 33 38 36 38 36
Coal 18 19 18 19 18
Nuclear 21 21 21 21 23
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 2.83 2.72
Transco Z6 New York 2.64 2.90
PG&E Citygate 13.00 8.00
Eastern Gas (old Dominion South) 2.33 2.23
Chicago Citygate 4.13 2.78
Algonquin Citygate 3.23 3.33
SoCal Citygate 10.81 8.23
Waha Hub 2.28 2.02
AECO 2.71 2.62
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 33.00 44.00
PJM West 27.00 32.25
Ercot North 15.25 18.50
Mid C 172.00 65.00
Palo Verde 70.50 61.75
SP-5 71.75 73.50
(Reporting by Scott DiSavino; Editing by Paul Simao and David Gregorio)
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