U.S. natural gas futures eased about 1% on Wednesday on recent increases in output, a drop in the amount of gas flowing to liquefied natural gas (LNG) export plants after Freeport LNG in Texas shut for Hurricane Beryl and a tremendous surplus of gas in storage for this time of year.
Raised demand forecasts for the next two weeks gave prices some support, as a brutal heat wave was expected to persist through at least late July, stoking demand for air conditioning and forcing power generators to burn lots of gas.
Analysts said gas stockpiles were about 18% above normal levels.
About 1.7 million homes and businesses in Texas remained without power on Wednesday in the wake of Hurricane Beryl.
Front-month gas futures for August delivery on the New York Mercantile Exchange fell 2.5 cents, or 1.1%, to $2.319 per million British thermal units (mmBtu), in technically oversold territory for a second day.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 102.4 billion cubic feet per day (bcfd) so far in July, up from an average of 100.2 bcfd in June and a 17-month low of 99.5 bcfd in May. U.S. output hit a monthly record high of 105.5 bcfd in December 2023.
Output slowed as prices dropped, hitting a 3-1/2 year low in March. The recovery in April, May and June prompted some producers, including EQT and Chesapeake Energy, to start pulling more gas out of the ground. On a daily basis, output hit a 17-week high of 103.0 bcfd on Sunday.
EQT is the nation’s biggest gas producer, and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy.
Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 25.
With hotter weather expected next week, LSEG forecast average gas demand in the Lower 48, including exports, will rise from 106.1 bcfd this week to 107.0 bcfd next week. Those forecasts were higher than LSEG’s outlook on Tuesday.
Gas flows to the seven big U.S. LNG export plants fell to 12.2 bcfd so far in July after Freeport LNG in Texas shut ahead of Hurricane Beryl on Sunday, down from 12.8 bcfd in June and a monthly record high of 14.7 bcfd in December 2023.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
With worries about Hurricane Beryl receding, gas prices fell to a seven-week low of around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and a three-week low of $12 at the Japan Korea Marker (JKM) benchmark in Asia.
Week ended Week ended Year ago Five-year
July 5 June 28 July 5 average
Forecast Actual July 5 U.S. weekly natgas storage change (bcf): +52 +32 +57 +57 U.S. total natgas in storage (bcf): 3,186 3,134 2,915 2,695 U.S. total storage versus 5-year average 18.2% 18.8%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year
Last Year Average Average
2023 (2018-2022) Henry Hub 2.38 2.34 2.64 2.66 3.60 Title Transfer Facility (TTF) 9.99 9.85 9.58 13.04 14.39 Japan Korea Marker (JKM) 12.37 12.39 11.44 14.39 14.31
LSEG 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 3 3 3 3 3 U.S. GFS CDDs 261 267 226 211 204 U.S. GFS TDDs 264 270 229 214 207
LSEG U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year (2019-2023)
Average For
Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 102.0 103.5 102.2 102.1 95.5 U.S. Imports from Canada 8.l 8.2 7.3 N/A 7.8 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 110.0 110.5 109.5 N/A 112.5
U.S. Demand (bcfd) U.S. Exports to Canada 1.7 1.3 1.3 N/A 2.3 U.S. Exports to Mexico 6.6 6.8 6.8 N/A 6.1 U.S. LNG Exports 12.4 11.7 11.8 13.0 8.6 U.S. Commercial 4.3 4.3 4.4 4.4 4.5 U.S. Residential 3.5 3.5 3.6 3.6 3.6 U.S. Power Plant 41.9 49.5 50.0 44.5 43.3 U.S. Industrial 21.6 21.6 21.7 21.3 21.3 U.S. Plant Fuel 5.0 5.1 5.0 5.1 4.9 U.S. Pipe Distribution 2.1 2.3 2.3 2.3 2.2 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 78.5 86.4 87.1 81.3 79.9 Total U.S. Demand 99.1 106.1 107.0 N/A 96.9
N/A is Not Available
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual Apr-Sep 75 75 83 107 81 Jan-Jul 76 76 77 102 79 Oct-Sep 78 78 76 103 81
U.S. weekly power generation percent by fuel – EIA
Week ended Week ended 2023 2022 2021
Jul 12 Jul 5 Wind 5 9 10 11 10 Solar 5 6 4 3 3 Hydro 6 6 6 6 7 Other 1 1 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 47 43 41 38 37 Coal 18 17 17 21 23 Nuclear 17 18 19 19 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.42 2.10 Transco Z6 New York 1.96 2.01 PG&E Citygate 3.18 2.49 Eastern Gas (old Dominion South) 1.60 1.61 Chicago Citygate 1.92 1.89 Algonquin Citygate 2.09 2.08 SoCal Citygate 2.74 1.92 Waha Hub 1.91 0.92 AECO 0.75 0.53
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 123.00 79.50 PJM West 98.75 102.75 Ercot North 28.25 30.50 Mid C 102.67 152.50 Palo Verde 129.00 72.25 SP-15 112.00 69.50
(Reporting by Scott DiSavino; Editing by David Gregorio)