US natgas prices drop 5% to 3-week low on reduced demand forecast
Adds latest prices
By Scott DiSavino
Oct 14 (Reuters) -U.S. natural gas futures dropped about 5% to a three-week low on Monday on forecasts for milder weather and less demand next week than previously expected.
Front-month gas futures NGc1 for November delivery on the New York Mercantile Exchange fell 13.8 cents, or 5.2%, to settle at $2.494 per million British thermal units (mmBtu), their lowest close since Sept. 20.
With meteorologists at AccuWeather and other weather services forecasting another mild winter,the market is showing signs of giving upon thoughts of extremecold that could cause prices to spike this winter with futures for March trading at a record low premium to April NGH25-J25 of just 10cents per mmBtu.
March is the last month of the winter storage withdrawal season and April is the first month of the summer storage injection season. Since gas is primarily a winter heating fuel, traders have said summer prices should not trade above winter.
The industry calls the March-April spread the "widow maker" because rapid price moves on changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.
"Contango (for the March-April spread is) looking more likely sooner rather than later, with mounting concern that the spread will drag spot into the abyss," Bob Yawger, director of energy futures at Mizuho, said in a report.
The March-April 2024 spread did not trade in contango, with the April contract priced higher than March, until Dec. 13. That compares with Jan. 25 for the March-April 2023 spread, never for the March-April 2022 spread and Dec. 8 for the March-April 2021 spread, according to seasonality data from LSEG.
The U.S. Energy Information Administration (EIA) forecast the number of heating degree days (HDDs) in 2024 would be slightly less than in 2023, which was the lowest since 2012.
HDDs, which measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius), are used to estimate demand to heat homes and businesses.
Financial firm LSEG said average gas output in the Lower 48 U.S. states slid to 101.4 billion cubic feet per day (bcfd) so far in October, down from 101.8 bcfd in September.
With seasonally warmer weather coming, LSEG forecast average gas demand in the Lower 48, including exports, will slide from 97.5 bcfd this week to 95.5 bcfd next week.
Week ended Oct 11 Forecast | Week ended Oct 4 Actual | Year ago Oct 11 | Five-year average Oct 11 | ||
U.S. weekly natgas storage change (bcf): | +68 | +82 | +93 | +89 | |
U.S. total natgas in storage (bcf): | 3,697 | 3,629 | 3,598 | 3,542 | |
U.S. total storage versus 5-year average | 4.4% | 5.1% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five-Year Average (2018-2022) |
Henry Hub NGc1 | 2.59 | 2.63 | 3.15 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 12.79 | 12.71 | 14.55 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 13.08 | 13.08 | 16.30 | 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 Norm | 30-Year Norm |
U.S. GFS HDDs | 133 | 112 | 106 | 137 | 154 |
U.S. GFS CDDs | 35 | 50 | 45 | 44 | 35 |
U.S. GFS TDDs | 168 | 162 | 151 | 181 | 189 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2019-2023) Average For Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 101.3 | 101.8 | 101.8 | 103.7 | 96.8 |
U.S. Imports from Canada | 8.0 | 7.7 | 7.1 | N/A | 7.1 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Total U.S. Supply | 109.3 | 109.5 | 108.9 | N/A | 103.9 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 1.9 | 1.8 | 1.8 | N/A | 2.3 |
U.S. Exports to Mexico | 6.5 | 6.3 | 6.4 | N/A | 5.9 |
U.S. LNG Exports | 12.4 | 13.4 | 13.6 | 14.3 | 10.0 |
U.S. Commercial | 5.3 | 5.9 | 6.7 | 6.8 | 6.9 |
U.S. Residential | 4.8 | 8.0 | 7.8 | 7.8 | 7.3 |
U.S. Power Plant | 35.5 | 31.1 | 29.7 | 21.4 | 30.9 |
U.S. Industrial | 22.1 | 22.8 | 22.4 | 22.6 | 22.3 |
U.S. Plant Fuel | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 |
U.S. Pipe Distribution | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
Total U.S. Consumption | 74.8 | 75.9 | 73.7 | 65.7 | 74.5 |
Total U.S. Demand | 95.7 | 97.5 | 95.5 | N/A | 92.7 |
N/A is Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam | 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 | 94 | 93 | 74 | 83 | 107 |
Jan-Jul | 89 | 88 | 76 | 77 | 102 |
Oct-Sep | 90 | 89 | 77 | 76 | 103 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Oct 18 | Week ended Oct 11 | 2023 | 2022 | 2021 | |
Wind | 11 | 9 | 10 | 11 | 10 |
Solar | 5 | 6 | 4 | 3 | 3 |
Hydro | 5 | 5 | 6 | 6 | 7 |
Other | 2 | 2 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 40 | 44 | 41 | 38 | 37 |
Coal | 17 | 16 | 17 | 21 | 23 |
Nuclear | 20 | 18 | 19 | 19 | 20 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 2.31 | 2.26 | |||
Transco Z6 New York NG-CG-NY-SNL | 1.56 | 1.46 | |||
PG&E Citygate NG-CG-PGE-SNL | 3.92 | 4.26 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 1.22 | 1.39 | |||
Chicago Citygate NG-CG-CH-SNL | 2.14 | 2.15 | |||
Algonquin Citygate NG-CG-BS-SNL | 1.56 | 1.63 | |||
SoCal Citygate NG-SCL-CGT-SNL | 2.34 | 2.99 | |||
Waha Hub NG-WAH-WTX-SNL | 0.28 | 0.28 | |||
AECO NG-ASH-ALB-SNL | 1.13 | 1.20 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 28.50 | 34.00 | |||
PJM West EL-PK-PJMW-SNL | 30.50 | 32.75 | |||
Ercot North EL-PK-ERTN-SNL | 35.95 | 25.75 | |||
Mid C EL-PK-MIDC-SNL | 48.00 | 64.25 | |||
Palo Verde EL-PK-PLVD-SNL | 25.50 | 44.00 | |||
SP-15 EL-PK-SP15-SNL | 22.25 | 41.00 |
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 terminal
For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html
For next-day SNL U.S. gas prices, see: 0#SNL-NG
For next-day SNL U.S. power prices, see: 0#SNL-PWR
For U.S. natgas price and storage polls, see: NGAS/POLL
For U.S. nuclear power outages, see: NUKE/
For U.S. Northwest hydro power report, see: NWRFC
For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44
For the U.S. natural gas speed guide, see: USGAS
For the U.S. power speed guide, see: USPOWER
To 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#3CFTC023651
NYMEX Henry Hub futures only 0#1CFTC023651
ICE Henry Hub options and futures combined 0#3CFTC023391
NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B
NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C
Reporting by Scott DiSavino, Editing by Nick Zieminski
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