UPDATE 2-U.S. natgas dips on cooler weather projections, Freeport shutdown

Reuters
Updated ·5 min read

(Adds latest prices) July 5 (Reuters) - U.S. natural gas futures fell more than 6% on Tuesday as a slightly cooler shift to near-term weather forecasts added to headwinds from a prolonged shutdown of Freeport LNG's export plant. Front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 20.7 cents, or 3.6%, to settle at $5.523 per mmBtu at 3:07 p.m. EDT (1907 GMT), after falling over 6% earlier in the session. Over the holiday weekend, "near-term weather forecasts have been revised significantly cooler, meaning gas-for-power demand will be less, relative to the expectations of last week," said John Abeln, an analyst with data provider Refinitiv. Freeport's gas export facility, hit by fire earlier this month, will not be allowed to repair or restart operations until it addresses risks to public safety, a pipeline regulator said on Thursday. Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8, so the expected 90-day outage would leave around 180 bcf of gas available to the U.S. market. "Slowing weather demand coupled with the effects of the Freeport outage and higher supply are all important market fundamentals that suggest the yearly summer slide for prices may still have room to continue," analysts at Gelber & Associates said in a note. The International Energy Agency said global natural gas demand is expected to dip this year and then grow at a slow rate over the following three years as Russia's war in Ukraine drives concerns about supply disruptions. But Refinitiv analyst Abeln said despite the Freeport-led declines, sluggish production growth could still trigger a "shortfall in stockpiles if we get a very cold winter, as gas demand remains high." U.S. natural gas liquids production fell by 32,000 barrels per day in April to 5.877 million barrel per day, according to the Energy Information Administration. Meanwhile, Russia's Gazprom could propose expanding its roubles-for-gas scheme for pipeline gas to include LNG, the Interfax news agency quoted a senior manager as saying on Monday. The Kremlin said that no decision had been made on whether to switch sales of Russian LNG to roubles. Week ended Week ended Year ago Five-year Jul 1 Jun 24 Jul 1 average (Forecast) (Actual) Jul 1 U.S. weekly natgas storage change (bcf): +72 +82 +25 +60 U.S. total natgas in storage (bcf): 2,323 2,251 2,572 2,633 U.S. total storage versus 5-year average -11.8% -12.5% 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 5.42 5.73 3.82 3.73 2.89 Title Transfer Facility (TTF) 50.9 48.84 12.49 16.04 7.49 Japan Korea Marker (JKM) 38.68 38.66 13.77 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 4 6 3 3 4 U.S. GFS CDDs 177 239 197 207 199 U.S. GFS TDDs 181 245 200 210 203 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 95.5 96.1 96.3 85.6 U.S. Imports from Canada 7.8 7.7 7.8 8.1 U.S. LNG Imports 0.0 0.0 0.0 0.1 Total U.S. Supply 103.3 103.8 104.1 93.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.2 2.4 2.4 2.3 U.S. Exports to Mexico 6.0 6.0 6.1 5.2 U.S. LNG Exports 10.6 11.2 10.8 4.5 U.S. Commercial 4.4 4.3 4.3 4.4 U.S. Residential 3.5 3.5 3.5 3.6 U.S. Power Plant 39.6 40.9 43.7 39.6 U.S. Industrial 21.0 20.9 21.0 20.8 U.S. Plant Fuel 4.7 4.7 4.8 4.7 U.S. Pipe Distribution 2.0 2.0 2.1 2.0 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 Total U.S. Consumption 75.4 76.5 79.6 75.2 Total U.S. Demand 94.3 96.1 98.9 87.2 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jul 8 Jul 1 Jun 24 Jun 17 Jun 10 Wind 12 8 Solar 3 5 Hydro 7 7 Other 2 2 Petroleum 0 0 Natural Gas 38 41 Coal 20 20 Nuclear 17 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 5.75 6.54 Transco Z6 New York 5.22 5.88 PG&E Citygate 6.18 7.32 Dominion South 4.95 5.56 Chicago Citygate 5.40 6.06 Algonquin Citygate 5.20 6.53 SoCal Citygate 5.35 6.31 Waha Hub 5.12 6.08 AECO 5.03 4.52 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 67.25 97.75 PJM West 94.75 91.50 Ercot North 78.00 82.00 Mid C 47.10 39.00 Palo Verde 45.75 64.00 SP-15 44.25 60.00 (Reporting by Ashitha Shivaprasad and Eileen Soreng in Bengaluru; Editing by Bernadette Baum and Rosalba O'Brien)

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