US natgas futures drop 6% to 4-week low on milder forecasts
March 27 (Reuters) - U.S. natural gas futures dropped about 6% on Monday to a four-week low, on rising
output and new forecasts for milder weather and lower heating demand next week that should allow utilities to start
injecting gas into storage at the beginning of April.
The amount of gas flowing to liquefied natural gas (LNG) export plants was on track to hit a monthly record high
in March, the month after Freeport LNG's export plant in Texas exited an eight-month outage. Freeport LNG shut in
June 2022 due to a fire.
Front-month gas futures for April delivery fell 12.8 cents, or 5.8%, to settle at $2.088 per million
British thermal units (mmBtu), their lowest since Feb. 21 when it settled at a 29-month low of $2.073.
The market has been extremely volatile this month, with the contract gaining or losing more than 5% on nine of
19 trading days.
So far this year, gas prices were down about 53%. Last week, gas speculators cut their net short futures and
options positions on the New York Mercantile and Intercontinental Exchanges for a fourth week in a row to their
lowest since August 2022, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders
report.
The last time speculators cut their net short positions for four consecutive weeks was April 2022.
Freeport LNG's export plant was on track to pull in about 1.5 billion cubic feet per day (bcfd) of gas on
Monday, up from 0.6 bcfd on Sunday, according to Refinitiv data. On March 8, Freeport LNG said it anticipated
feedgas flows would rise and fall as the plant returns to full production over the "next few weeks."
Sources familiar with the plant said Freeport LNG had canceled some cargoes due to issues with one of three
liquefaction trains, and it could take longer than the company expects to return to full service. Liquefaction
trains turn gas into LNG for export.
When operating at full power, Freeport LNG can turn about 2.1 bcfd of gas into LNG for export.
Total gas flows to all seven big U.S. LNG export plants rose to an average of 13.0 bcfd so far in March, up from
12.8 bcfd in February. That would top the monthly record of 12.9 bcfd in March 2022, before the Freeport LNG
facility shut.
The seven big U.S. LNG export plants, including Freeport LNG, can turn about 13.8 bcfd of gas into LNG.
SUPPLY AND DEMAND
Refinitiv said average gas output in the U.S. Lower 48 states rose to 98.5 bcfd so far in March from 98.1 bcfd
in February. The monthly record is 99.9 bcfd in November 2022.
Meteorologists projected the weather in the Lower 48 states would remain mostly near normal through April 11.
With warmer spring-like weather, Refinitiv forecast U.S. gas demand, including exports, would drop from 109.4
bcfd this week to 102.5 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Friday,
while its forecast for next week was lower.
Mild winter weather this year has prompted utilities to leave more gas in storage and should allow them to start
injecting fuel into inventories at the beginning of April.
Gas stockpiles were about 23% above their five-year average (2018-2022) during the week ended March 17 and were
expected to end about 20% above normal during the colder-than-normal week ended March 24, according to federal data
and analysts' estimates.
Week ended Week ended Year ago Five-year
Mar 24 Mar 17 Mar 24 average
(Forecast) (Actual) Mar 24
U.S. weekly natgas storage change (bcf): -55 -72 +15 -17
U.S. total natgas in storage (bcf): 1,845 1,900 1,411 1,532
U.S. total storage versus 5-year average 20.4% 22.7%
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 2.13 2.17 4.98 6.54 3.60
Title Transfer Facility (TTF) 13.22 13.61 41.81 40.50 14.39
Japan Korea Marker (JKM) 12.70 13.34 36.96 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 216 243 235 211 211
U.S. GFS CDDs 28 21 25 25 21
U.S. GFS TDDs 244 264 260 236 232
Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 98.5 98.8 98.8 94.6 89.4
U.S. Imports from Canada 7.8 7.2 7.9 9.7 8.6
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 106.2 106.0 106.7 104.3 99.1
U.S. Demand (bcfd)
U.S. Exports to Canada 2.8 2.9 2.9 3.2 3.0
U.S. Exports to Mexico 4.8 5.0 5.1 5.4 5.2
U.S. LNG Exports 13.0 12.9 13.2 12.9 7.4
U.S. Commercial 13.1 11.4 9.6 12.1 12.4
U.S. Residential 20.6 17.5 14.1 18.1 19.6
U.S. Power Plant 29.0 29.6 28.4 25.0 25.7
U.S. Industrial 23.6 22.8 22.0 23.7 23.6
U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9
U.S. Pipe Distribution 2.5 2.4 2.2 2.5 2.6
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 93.7 88.7 81.4 86.4 88.9
Total U.S. Demand 114.3 109.4 102.5 107.9 104.5
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Mar 31 Mar 24 Mar 17 Mar 10 Mar 3
Wind 14 14 15 12 13
Solar 4 3 3 3 3
Hydro 6 7 7 7 7
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 38 37 37 41 40
Coal 16 17 16 16 15
Nuclear 19 18 19 20 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 2.04 2.08
Transco Z6 New York 1.92 1.87
PG&E Citygate 6.72 7.85
Eastern Gas (old Dominion South) 1.69 1.78
Chicago Citygate 2.13 2.11
Algonquin Citygate 1.95 1.98
SoCal Citygate 9.50 8.55
Waha Hub 0.63 0.93
AECO 2.01 1.97
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 35.00 27.25
PJM West 23.50 25.25
Ercot North 29.75 27.00
Mid C 105.00 47.75
Palo Verde 35.50 34.25
SP-15 32.25 37.75
(Reporting by Scott DiSavino; Editing by Andrea Ricci and David Gregorio)
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