US natgas prices edge up as higher output offsets lower flows to LNG export plants

Reuters
06 Jun
US natgas prices edge up as higher output offsets lower flows to LNG export plants

Gas futures up 7% for week on expectations demand will rise later in June

Energy firms may inject near-record amounts of gas in storage

LNG feedgas to Sabine and Plaquemines are about the same for first time

By Scott DiSavino

June 6 (Reuters) - U.S. natural gas futures edged up about 1% on Friday as an increase in daily output in recent days offset a decline in gas flows to liquefied natural gas $(LNG)$ export plants.

Gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 2.5 cents, or 0.7%, to $3.702 per million British thermal units.

For the week, the contract was up about 7% after gaining about 3% last week on expectations that demand for gas will rise later in the month when LNG export plants exit maintenance outages and power generators burn more of the fuel to produce electricity as homes and businesses crank up their air conditioners to escape hot summer weather.

Fast-growing amounts of gas in storage have helped keep prices in check in recent weeks. Gas stockpiles are currently about 5% above normal for this time of year and analysts forecast energy firms would make a record-tying triple-digit injection for a seventh week in a row this week. EIA/GAS GAS/POLL

The last time energy firms added 100 or more bcf of gas into storage for seven weeks in a row was in June 2014, according to federal energy data going back to 2010.

Another factor keeping pressure on futures prices in recent weeks has been low cash prices. Next-day prices at the U.S. Henry Hub benchmark NG-W-HH-SNL in Louisiana were trading around $2.86 per mmBtu, keeping spot contracts below front-month futures every day since late April.

Analysts have said that so long as spot prices remain far enough below front-month futures NGc1 to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states has fallen to 104.8 billion cubic feet per day so far in June, down from 105.2 bcfd in May and a monthly record high of 106.3 bcfd in March. The reduction so far this month, however, was smaller than previously projected.

Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 21.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 95.4 bcfd this week to 97.7 bcfd next week and 100.4 bcfd in two weeks. The forecasts for this week and next were similar to LSEG's outlook on Thursday.

The average amount of gas flowing to the eight big U.S. LNG export plants has fallen to 13.8 bcfd so far in June, down from 15.0 bcfd in May and a monthly record high of 16.0 bcfd in April.

Traders said LNG feedgas reductions since April were primarily due to spring maintenance, including work at Cameron LNG's 2.0-bcfd plant in Louisiana and Cheniere Energy's LNG.N 4.5-bcfd Sabine Pass facility in Louisiana and 3.9-bcfd Corpus Christi plant in Texas, and short, unplanned unit outages at Freeport LNG's 2.1-bcfd plant in Texas on May 6, May 23, May 28 and June 3.

With maintenance reducing flows to Sabine, the nation's biggest LNG export plant, and as new units enter service at Venture Global LNG's VG.N 3.2-bcfd Plaquemines in Louisiana, the country's newest plant, the amount of gas expected to flow to each facility was on track to reach around 2.8 bcfd on Friday - a 23-month low for Sabine and an all-time high for Plaquemines.

Energy traders have noted that LNG maintenance would likely continue through early- to mid-June at Cameron and late-June at Sabine.

Week ended Jun 6 Forecast

Week ended May 30 Actual

Year ago Jun 6

Five-year average

Jun 6

U.S. weekly natgas storage change (bcf):

+105

+122

+77

+87

U.S. total natgas in storage (bcf):

2,703

2,598

2,963

2,568

U.S. total storage versus 5-year average

+5.3%

+4.7%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2024

Five-Year Average (2019-2023)

Henry Hub NGc1

3.73

3.68

2.81

2.41

3.52

Title Transfer Facility (TTF) TRNLTTFMc1

12.03

12.24

10.87

10.95

15.47

Japan Korea Marker (JKM) JKMc1

12.42

12.37

12.30

11.89

15.23

LSEG Heating $(HDD.UK)$, Cooling $(CDD.AU)$ and Total (TDD) Degree Days

Two-Week Total Forecast

Current Day

Prior Day

Prior Year

10-Year Norm

30-Year Norm

U.S. GFS HDDs

9

9

10

18

18

U.S. GFS CDDs

172

170

160

143

140

U.S. GFS TDDs

181

179

170

161

158

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year (2020-2024)Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

105.4

104.9

104.7

101.2

96.8

U.S. Imports from Canada

8.0

7.5

7.4

N/A

7.3

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.0

Total U.S. Supply

113.4

112.4

112.2

N/A

104.1

U.S. Demand (bcfd)

U.S. Exports to Canada

1.6

1.7

1.8

N/A

2.3

U.S. Exports to Mexico

7.4

7.4

7.4

N/A

6.3

U.S. LNG Exports

15.1

13.5

13.9

13.2

9.1

U.S. Commercial

5.0

4.7

4.5

4.5

4.8

U.S. Residential

4.8

4.1

3.7

3.8

4.3

U.S. Power Plant

31.6

34.5

37.0

37.0

38.0

U.S. Industrial

22.4

22.3

22.1

21.6

21.5

U.S. Plant Fuel

5.2

5.2

5.2

5.2

5.2

U.S. Pipe Distribution

1.9

1.9

2.0

1.9

2.8

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.2

Total U.S. Consumption

71.0

72.9

74.7

74.1

76.8

Total U.S. Demand

95.0

95.4

97.7

N/A

88.2

N/A is Not Available

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam (Fiscal year ending Sep 30)

2025 Current Day

% of Normal Forecast

2025

Prior Day % of Normal Forecast

2024

% of Normal Actual

2023

% of Normal Actual

2022

% of Normal Actual

Apr-Sep

79

79

74

83

107

Jan-Jul

80

80

76

77

102

Oct-Sep

82

81

77

76

103

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

Week ended Jun 6

Week ended May 30

2024

2023

2022

Wind

10

10

11

10

11

Solar

8

8

5

4

3

Hydro

8

8

6

6

6

Other

1

1

1

2

2

Petroleum

0

0

0

0

0

Natural Gas

40

39

42

41

38

Coal

15

15

16

17

21

Nuclear

19

19

19

19

19

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

Hub

Current Day

Prior Day

Henry Hub NG-W-HH-SNL

2.86

2.80

Transco Z6 New York NG-CG-NY-SNL

1.88

2.15

PG&E Citygate NG-CG-PGE-SNL

3.17

3.35

Eastern Gas (old Dominion South) NG-PCN-APP-SNL

1.76

1.98

Chicago Citygate NG-CG-CH-SNL

2.71

2.77

Algonquin Citygate NG-CG-BS-SNL

2.73

4.35

SoCal Citygate NG-SCL-CGT-SNL

3.49

3.63

Waha Hub NG-WAH-WTX-SNL

1.68

1.59

AECO NG-ASH-ALB-SNL

0.91

0.62

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

Hub

Current Day

Prior Day

New England E-NEPLMHP-IDX

41.17

56.74

PJM West E-PJWHDAP-IDX

46.09

49.77

Mid C W-MIDCP-IDX

44.49

50.26

Palo Verde W-PVP-IDX

39.46

40.11

SP-15 W-SP15-IDX

22.82

24.03

text_section_type="notes">For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminalFor graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.htmlFor next-day SNL U.S. gas prices, see: 0#SNL-NGFor next-day SNL U.S. power prices, see: 0#SNL-PWRFor U.S. natgas price and storage polls, see: NGAS/POLLFor U.S. nuclear power outages, see: NUKE/For U.S. Northwest hydro power report, see: NWRFCFor U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44For the U.S. natural gas speed guide, see: USGASFor the U.S. power speed guide, see: USPOWERTo determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)NYMEX Henry Hub options and futures combined 0#3CFTC023651NYMEX Henry Hub futures only 0#1CFTC023651ICE Henry Hub options and futures combined 0#3CFTC023391NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565BNYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C

(Reporting by Scott DiSavino; Editing by Paul Simao)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net/))

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