U.S. natgas futures rise 2% on higher demand forecasts

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U.S. natural gas futures rose on Monday on forecasts for higher gas demand over the

next two weeks despite record production levels.

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Front-month gas futures rose 13.5 cents, or 2%, to $6.880 per million British thermal units (mmBtu)

as of 9:23 a.m. EDT (1323 GMT).

Data provider Refinitiv projected average U.S. gas demand, including exports, would rise from 90.1 billion

cubic feet per day (bcfd) last week to 92.3 bcfd this week, and to 95.4 bcfd next week.

“The market is pulled by forces from different directions and is trying to establish a new short-term

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equilibrium at the moment,” said Zhen​ Zhu, managing consultant at C.H. Guernsey and Co in Oklahoma City.

“Higher prices have stimulated near-record production and we will continue to see increases in the

production, which is likely to put a lid on gas prices, at least in the near term, despite the fact that bulls

are still trying to run up the market.”

Refinitiv said average gas output in the U.S. Lower 48 states rose to 100.1 bcfd so far in October from a

monthly record of 99.4 bcfd in September.

Gas was trading around $50 per mmBtu in Europe and $35 in Asia. British and Dutch

wholesale gas prices fell on Monday morning due to strong high imports of liquefied natural gas (LNG) and

improved output from nuclear power plants in France helped curb demand.

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Russian gas exports via the three main lines into Germany – Nord Stream 1 (Russia-Germany), Yamal

(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – have averaged

just 1.3 bcfd so far in October, the same as September but well below the 9.2 bcfd seen in October 2021.

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U.S. gas futures lag far behind global prices because the United States is the world’s top producer with

all the fuel it needs for domestic use, while capacity constraints and the outage at the Freeport LNG export

plant in Texas, the second biggest American LNG plant, prevent the country from exporting more LNG.

The average amount of gas flowing to U.S. LNG export plants fell to 10.8 bcfd so far in October from 11.5

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bcfd in September. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants

can turn about 13.8 bcfd of gas into LNG.

So far this year, most U.S. LNG has gone to countries in Europe as they wean themselves off Russian

energy.

U.S. futures were up about 83% so far this year as soaring global gas prices fed demand for U.S. exports

due to supply disruptions and sanctions linked to Russia’s Feb. 24 invasion of Ukraine.

Russia, the world’s second-biggest gas producer, has provided about a third of Europe’s gas in recent

years, totaling about 18.3 bcfd in 2021. The European Union wants to cut Russian gas imports by two-thirds by

the end of 2022 and refill stockpiles to 80% of capacity by Nov. 1 and 90% by Nov. 1 each year beginning in

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2023.

Gas stockpiles in northwestern Europe – Belgium, France, Germany and the Netherlands –

were currently about 7% above their five-year (2017-2021) average for this time of year, according to

Refinitiv. Storage was currently around 92% of capacity.

That is much healthier than U.S. gas inventories, which were still about 8% below their five-year norm.

Week ended Week ended Year ago Five-year

Oct 7 Sep 30 Oct 7 average

(Forecast) (Actual) Oct 7

U.S. weekly natgas storage change (bcf): +116 +129 +86 +82

U.S. total natgas in storage (bcf): 3,222 3,106 3,357 3,452

U.S. total storage versus 5-year average -6.7% -7.8%

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

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Last Year Average Average

2021 (2017-2021)

Henry Hub 6.79 6.74 5.57 3.73 2.89

Title Transfer Facility (TTF) 49.97 51.30 30.84 16.04 7.49

Japan Korea Marker (JKM) 34.46 35.86 33.22 18.00 8.95

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 127 114 92 123 131

U.S. GFS CDDs 41 51 49 49 43

U.S. GFS TDDs 168 165 141 172 174

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 100.2 100.1 100.3 87.0

U.S. Imports from Canada 8.0 7.9 7.9 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.1

Total U.S. Supply 108.2 108.0 108.2 94.8

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U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 2.4 2.4 2.4

U.S. Exports to Mexico 5.6 5.5 5.6 5.3

U.S. LNG Exports 11.0 10.7 10.0 5.6

U.S. Commercial 5.7 6.2 7.6 6.8

U.S. Residential 5.6 6.6 9.4 7.3

U.S. Power Plant 31.6 32.1 30.7 29.0

U.S. Industrial 21.5 21.8 22.5 21.8

U.S. Plant Fuel 5.0 4.9 5.0 4.9

U.S. Pipe Distribution 1.9 2.0 2.1 1.9

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

Total U.S. Consumption 71.4 73.6 77.3 71.8

Total U.S. Demand 90.1 92.3 95.4 85.1

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

Week ended Week ended Week ended Week ended Week ended

Oct 14 Oct 7 Sep 30 Sep 23 Sep 16

Wind 7 9 10 8 6

Solar 4 4 3 3 3

Hydro 5 6 5 5 6

Other 3 3 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 41 41 41 42 45

Coal 20 18 19 19 21

Nuclear 20 21 19 19 18

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

Hub Current Day Prior Day

Henry Hub 6.25 6.91

Transco Z6 New York 5.50 5.95

PG&E Citygate 7.93 7.73

Dominion South 5.20 6.01

Chicago Citygate 5.49 6.23

Algonquin Citygate 5.62 6.14

SoCal Citygate 6.40 7.24

Waha Hub 3.56 4.24

AECO 4.33 3.92

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

Hub Current Day

New England 63.25 61.50

PJM West 55.75 68.25

Ercot North 60.00 57.00

Mid C 77.75 85.50

Palo Verde 65.50 75.50

SP-15 69.00 77.75

(Reporting by Brijesh Patel in Bengaluru; editing by Jonathan Oatis)