US natgas futures up 3% on daily output decline, rising LNG feedgas

U.S. natural gas futures rose about 3% on Wednesday on a decline in daily output and an

increase in the amount of gas flowing to liquefied natural gas (LNG) export plants since Freeport LNG’s export

facility in Texas exited an eight-month outage in February and returned to full power over the past week.

That price increase occurred despite forecasts for milder weather and lower heating demand over the next two

weeks than previously expected, which should allow utilities to start injecting gas into storage this week.

Front-month gas futures for May delivery on the New York Mercantile Exchange (NYMEX) were up 5.5 cents,

or 2.6%, to $2.161 per million British thermal units at 8:55 a.m. EDT (1255 GMT).

The market has been extremely volatile in recent weeks with the front-month gaining or losing more than 5% in 12

of the past 23 trading days.

With gas market volatility rising, open interest in NYMEX gas futures rose to 1.37 million contracts on Tuesday,

the most since October 2021 for a fourth day in a row.

At the same time, shares outstanding in the U.S. Natural Gas Fund, an exchange-traded fund (ETF) designed

to track the daily price movement of gas, rose to a record 165.9 million, topping the prior record of 161.4 million

set on March 30.

Freeport LNG’s export plant, which shut in June 2022 after a fire, was on track to pull in about 2.2 billion

cubic feet per day (bcfd) of gas on Wednesday, down from 2.3 bcfd on Monday and Tuesday, according to data provider

Refinitiv.

That, however, was still above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export. LNG plants can

pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce

LNG.

Average gas flows to all seven big U.S. LNG export plants rose to 13.9 bcfd so far in April, up from a record

13.2 bcfd in March.

The seven big U.S. LNG export plants 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 has risen to 99.9 bcfd so far in April, up from

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99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January 2023.

On a daily basis, however, gas output was on track to decline 2.4 bcfd over the last three days to a preliminary

two-month low of 98.5 bcfd on Wednesday. Most of the declines this week were in Pennsylvania and West Virginia.

Meteorologists projected the weather in the Lower 48 states would remain mostly warmer than normal through April

20, except for a few near-normal days from April 6-8.

With warmer spring-like weather expected to keep reducing the amount of gas burned to heat homes and businesses,

Refinitiv forecast U.S. gas demand, including exports, would drop from 101.7 bcfd this week to 95.2 bcfd next week.

Those forecasts were lower than Refinitiv’s outlook on Tuesday.

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Mostly mild weather over the 2022-2023 winter allowed utilities to leave more gas in storage than usual and

should enable them to start injecting fuel into inventories this week.

Gas stockpiles were about 21% above their five-year average (2018-2022) during the week ended March 24 and were

expected to end about 20% above normal during the colder-than-normal week ended March 31, according to federal data

and analysts’ estimates.

Week ended Week ended Year ago Five-year

Mar 31 Mar 24 Mar 31 average

(Forecast) (Actual) Mar 31

U.S. weekly natgas storage change (bcf): -20 -47 -24 0

U.S. total natgas in storage (bcf): 1,833 1,853 1,387 1,532

U.S. total storage versus 5-year average 19.6% 21.0%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

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Last Year Average Average

2022 (2018-2022)

Henry Hub 2.12 2.11 6.70 6.54 3.60

Title Transfer Facility (TTF) 15.08 14.59 31.83 40.50 14.39

Japan Korea Marker (JKM) 13.16 12.75 29.22 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 118 127 191 184 176

U.S. GFS CDDs 39 42 32 29 28

U.S. GFS TDDs 157 169 223 213 204

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 100.1 99.9 100.2 95.6 89.7

U.S. Imports from Canada 6.9 6.5 7.1 8.9 8.6

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

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Total U.S. Supply 107.0 106.4 107.3 104.5 98.4

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 2.1 1.9 2.5 2.6

U.S. Exports to Mexico 5.5 5.3 5.1 5.6 5.1

U.S. LNG Exports 13.2 13.9 13.3 12.5 7.1

U.S. Commercial 11.5 9.2 7.7 9.8 8.7

U.S. Residential 17.7 13.2 10.1 13.9 12.5

U.S. Power Plant 29.8 29.0 28.5 25.6 24.9

U.S. Industrial 22.8 21.9 21.5 23.1 22.5

U.S. Plant Fuel 4.9 4.9 5.0 4.9 4.9

U.S. Pipe Distribution 2.4 2.1 2.0 2.4 2.4

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 89.2 80.5 74.8 79.8 76.0

Total U.S. Demand 110.7 101.7 95.2 100.4 90.8

U.S. weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended Week ended

Apr 1 Mar 31 Mar 24 Mar 17 Mar 10

Wind 17 14 14 15 12

Solar 4 4 3 3 3

Hydro 7 7 7 7 7

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Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 36 39 37 37 41

Coal 14 16 17 16 16

Nuclear 19 19 18 19 20

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 2.13 2.09

Transco Z6 New York 1.83 1.98

PG&E Citygate 7.27 7.48

Eastern Gas (old Dominion South) 1.73 1.80

Chicago Citygate 2.25 2.00

Algonquin Citygate 2.06 2.15

SoCal Citygate 8.83 8.55

Waha Hub 1.64 1.55

AECO 1.87 1.94

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 34.75 28.75

PJM West 40.75 31.50

Ercot North 30.00 23.70

Mid C 136.67 100.20

Palo Verde 59.50 36.25

SP-15 63.00 35.25

(Reporting by Scott DiSavino; Editing by Paul Simao)