UPDATE 1-U.S. natgas hits 13-yr high again as power and LNG use more fuel

·6 min read

(Adds latest prices) May 25 (Reuters) - U.S. natural gas futures rose about 2% to a fresh 13-year high on Wednesday as power generators and liquefied natural gas (LNG) export plants consumed more of the fuel. "The bullish weather of a cold April flipping to a hot May, lack of production growth, and a tightening coal market have driven natural gas prices risks markedly higher," analysts at energy advisory EBW Analytics said, noting: "With ill-defined technical resistance to the upside, further fireworks remain possible into (Thursday's) final settlement." On their second to last day as the front-month, front-month gas futures for June delivery rose 17.5 cents, or 2.0%, to settle at $8.971 per million British thermal units (mmBtu), their highest close since August 2008 for a second day in a row. Futures for July, which will soon be the front-month, were up about 0.9% to $8.91 per mmBtu. U.S. power companies burned more gas to generate electricity in recent weeks due to a lack of wind. Wind was on track to produce just 10% of U.S. power this week, down from a recent high of 16%, while gas was on track to generate about 36%, up from a recent low of 33% a few weeks ago. Traders said burning more gas for power generation cuts the amount of fuel available for storage for next winter. U.S. gas stockpiles were already about 15% below normal for this time of year. Analysts at Ritterbusch and Associates, a consultancy, said the "bullish combo of a sizable supply shortfall and an excessive net-short speculative position" caused them to boost their price target for July futures to $10 per mmBtu. U.S. gas futures were up about 139% so far this year as much higher prices in Europe and Asia kept demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears Moscow might cut gas supplies to Europe. Despite supply concerns in Europe, U.S. futures have soared about 38% over the past month, while European prices slid about 9% as Russia keeps sending supplies via pipeline and LNG vessels continue to deliver cargoes. Gas was trading around $27 per mmBtu in Europe and $22 in Asia. With European gas stockpiles filling fast, traders noted LNG tankers may soon turn toward Asia where demand is expected to rise quickly as China starts to ease coronavirus lockdowns. U.S. futures, however, continue to lag far behind global prices because the United States is the world's top producer with all the gas it needs for domestic use, while capacity constraints inhibit additional LNG exports. Data provider Refinitiv said average gas output in the U.S. Lower 48 states climbed to 95.0 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April, off the monthly record of 96.1 bcfd in November 2021. Refinitiv projected average U.S. gas demand, including exports, would slide from 89.4 bcfd this week to 88.3 bcfd next week. The forecast for this week was higher than Refinitiv forecast on Tuesday, while its outlook for next week was lower. The average amount of gas flowing to U.S. LNG export plants rose to 12.4 bcfd so far in May from 12.2 bcfd in April. It hit a monthly record of 12.9 bcfd in March. The United States can turn about 13.2 bcfd of gas into LNG. Week ended Week ended Year ago Five-year May 20 May 13 May 20 average (Forecast) (Actual) May 20 U.S. weekly natgas storage change (bcf): +89 +89 +109 +97 U.S. total natgas in storage (bcf): 1,821 1,732 2,199 2,139 U.S. total storage versus 5-year average -14.9% -15.2% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 8.92 8.80 2.96 3.73 2.89 Title Transfer Facility (TTF) 26.47 26.90 8.88 16.04 7.49 Japan Korea Marker (JKM) 22.07 22.60 9.65 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 24 27 34 31 34 U.S. GFS CDDs 126 124 90 98 115 U.S. GFS TDDs 150 151 124 129 149 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 95.1 95.4 95.6 92.5 83.9 U.S. Imports from Canada 7.6 7.6 7.8 7.3 7.6 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 102.7 102.9 103.4 99.8 92.6 U.S. Demand (bcfd) U.S. Exports to Canada 2.8 2.7 2.7 2.1 2.1 U.S. Exports to Mexico 6.1 6.1 6.2 6.2 4.8 U.S. LNG Exports 12.2 13.3 13.0 10.5 5.1 U.S. Commercial 5.0 5.1 4.6 5.0 5.6 U.S. Residential 4.8 4.9 4.1 4.8 6.7 U.S. Power Plant 31.4 29.8 30.5 27.6 26.0 U.S. Industrial 20.7 20.9 20.6 21.4 20.9 U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.6 U.S. Pipe Distribution 1.8 1.8 1.8 1.8 1.8 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 68.5 67.4 66.5 65.4 65.7 Total U.S. Demand 89.6 89.4 88.3 84.2 77.7 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended May 27 May 20 May 13 May 6 Apr 29 Wind 10 12 15 13 16 Solar 4 4 4 4 4 Hydro 7 7 7 7 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 36 37 34 36 33 Coal 20 20 18 19 19 Nuclear 20 19 19 20 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 8.87 8.16 Transco Z6 New York 7.80 7.28 PG&E Citygate 9.94 9.59 Dominion South 7.60 7.27 Chicago Citygate 8.39 8.02 Algonquin Citygate 7.88 7.82 SoCal Citygate 9.14 8.71 Waha Hub 8.36 7.56 AECO 5.32 5.17 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 74.75 73.50 PJM West 77.00 77.50 Ercot North 83.29 66.25 Mid C 67.86 88.50 Palo Verde 87.50 51.75 SP-15 87.75 78.00 (Reporting by Scott DiSavino Editing by Bernadette Baum and Nick Zieminski)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting