U.S. natgas up as output cuts counter forecast for less demand

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U.S. natural gas futures firmed on Tuesday as winter storms across the country curtailed gas output over

the weekend, offseting pressure from forecasts for less cold weather and lower demand over the next two weeks.

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Front-month gas futures rose 20 cents, or 4%, to settle at $5.282 per million British thermal units

(mmBtu). The contract lost 23% last week.

“Gas edging higher on storm related supply issues but short-term temperature outlooks still bearish,”

analysts at energy consulting firm Ritterbusch and Associates said in a note.

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“The volatility in the weather forecasts is, of course, prompting major swings in gas pricing with the

market more focused on the imminent warm-up than on last week’s extreme cold.”

Data provider Refinitiv showed average gas output in the U.S. Lower 48 states fell to 80.4 billion cubic

feet per day (bcfd) on Saturday, its biggest drop in daily output since the February freeze of 2021 when a

winter storm froze gas supplies in Texas and forced that state’s electric grid operator to impose rolling power

outages.

Last week, the storms also caused more than a million homes and businesses to lose power on the U.S. East

Coast, in the Midwest and Texas.

U.S. daily demand from the four biggest gas consuming sectors – residential, commercial, power and

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industrial – reached an all-time high of 148.5 billion cubic feet (bcf) on Friday, according to Refinitiv data.

Refinitiv projected average U.S. gas demand, including exports, would rise from 139.9 bcfd last week to

145.7 bcfd this week before dropping to 113.9 bcfd in the next week with the weather expected to turn mild in

early January.

Freeport LNG said on Friday it was again delaying the restart of the export facility, this time from the

end of the year to the second half of January, pending regulatory approval. The latest delay follows several

others from October to November, to December, to around the end of the year.

The Freeport plant shut on June 8 after a pipe failure caused an explosion due to inadequate operating and

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testing procedures, human error and fatigue, according to a report by consultants hired to review the incident

and suggest action.

Week ended Week ended Year ago Five-year

Dec 23 Dec 16 Dec 23 average

(Forecast) (Actual) Dec 23

U.S. weekly natgas storage change (bcf): -188 -87 -125 -106

U.S. total natgas in storage (bcf): 3,137 3,325 3,245 3,197

U.S. total storage versus 5-year average -1.9% +0.7%

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

Last Year Average Average

2021 (2017-2021)

Henry Hub 5.28 5.01 3.86 3.73 2.89

Title Transfer Facility (TTF) — 25.75 37.67 16.04 7.49

Japan Korea Marker (JKM) — 31.64 37.84 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

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Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 352 409 432 433 436

U.S. GFS CDDs 4 3 11 4 4

U.S. GFS TDDs 356 412 443 437 440

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week Five-Year

Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 97.9 82.9 85.9 89.8

U.S. Imports from Canada 9.1 10.0 7.5 8.9

U.S. LNG Imports 0.0 0.0 0.0 0.3

Total U.S. Supply 107.1 92.9 92.5 99.0

U.S. Demand (bcfd)

U.S. Exports to Canada 2.5 0.9 1.2 3.2

U.S. Exports to Mexico 5.3 5.0 5.2 5.0

U.S. LNG Exports 12.7 12.7 12.1 6.9

U.S. Commercial 18.7 10.9 13.0 14.6

U.S. Residential 32.3 21.6 21.4 24.6

U.S. Power Plant 33.7 36.0 30.2 27.3

U.S. Industrial 26.5 26.9 23.8 24.9

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U.S. Plant Fuel 4.8 4.1 4.2 4.9

U.S. Pipe Distribution 3.2 3.4 2.5 2.5

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

Total U.S. Consumption 119.3 128.8 95.3 98.9

Total U.S. Demand 139.9 145.7 113.9 114.0

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

Week ended Week ended Week ended Week ended

Week ended Dec 23 Dec 16 Dec 9 Dec 2

Dec 30

Wind 8 9 12 9 15

Solar 2 2 2 2 2

Hydro 6 6 6 6 6

Other 2 2 2 2 2

Petroleum 2 0 0 0 0

Natural Gas 37 37 39 35

37

Coal 24 20 20 19

27

Nuclear 19 20 21 21

17

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

Hub Current Day Prior Day

Henry Hub 7.15 7.10

Transco Z6 New York 35.88 27.77

PG&E Citygate 39.32 30.70

Dominion South 4.19 6.35

Chicago Citygate 8.71 11.48

Algonquin Citygate 35.00 30.16

SoCal Citygate 38.75 35.72

Waha Hub 5.20 8.96

AECO 6.07 5.35

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

Hub Current Day Prior Day

New England 227.50 200.25

PJM West 178.50 148.50

Ercot North 672.50 282.00

Mid C 302.00 403.68

Palo Verde 287.75 305.00

SP-5 294.25 309.50

(Reporting by Brijesh Patel and Rahul Paswan, and additional reporting by Bharat Govind Gautam in Bengaluru;

Editing by Tomasz Janowski and David Gregorio)