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Sept 6 (Reuters) - U.S. natural gas futures slid about 3% on Wednesday to a two-week low on forecasts for heat to moderate over the next two weeks.
Limiting losses were lifted forecasts for gas demand over the same period, a drop in daily output and an increase in gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 7.2 cents, or 2.8%, to settle at $2.510 per million British thermal units (mmBtu), their lowest close since Aug. 23. It was the first four-day streak of declines for the front month since mid July.
The Texas grid operator, the Electric Reliability Council of Texas (ERCOT), issued a Weather Watch from Sept. 6-8 due to forecast higher temperatures, higher electrical demand, and the potential for lower reserves. ERCOT said there is currently enough capacity to meet forecast demand and it expects grid conditions to remain normal.
ERCOT forecast the power situation would be tight Wednesday evening with supplies expected to exceed demand by less than 1,000 megawatts (MW) after the sun goes down and solar power stops working at around 8 p.m. local time.
ERCOT said it expects to set a new September peak demand record every weekday this week, but also expects those peaks to
remain below its all-time high of 85,435 megawatts on Aug. 10.Extreme heat requires utilities to burn more gas to power cooling, especially in Texas. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal
energy data showed.SUPPLY AND DEMAND
Financial firm LSEG said that so far in September, average gas output in the lower 48 U.S. states slid to 101.9 billion cubic feet per day (bcfd) from 102.2 bcfd in August and a record 102.3 bcfd in May.
On a daily basis, output was on track to fall about 2.7 bcfd to a preliminary five-month low of 99.6 bcfd on Wednesday. That would be the biggest one-day drop in output since mid June, but traders noted preliminary data is often revised later in the day.
While heat in the lower 48 U.S. states should moderate over the next two weeks, meteorologists forecast it will remain mostly hotter than normal through at least Sept. 21.
LSEG forecast U.S. gas demand, including exports, will hold around 101.2 bcfd this week and next. Those forecasts were higher than LSEG's outlook on Tuesday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 12.8 bcfd so far in September from 12.3 bcfd in August. That compares with a monthly record of 14.0 bcfd in April.
The U.S. is on track to become the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's war in Ukraine.
Gas was trading around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $13 at the Japan Korea Marker (JKM) in Asia.
Week ended Week ended Year ago Five-year
Sep 1 Aug 25 Sep 1 average
Forecast Actual Sep 1
U.S. weekly natgas storage change (bcf): 43 32 55 60
U.S. total natgas in storage (bcf): 3,158 3,115 2,686 2,926
U.S. total storage versus 5-year average 7.9% 8.7%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2022 (2017-2021)
Henry Hub 2.62 2.77 7.76 6.54 2.89
Title Transfer Facility (TTF) 10.61 10.66 57.90 40.50 7.49
Japan Korea Marker (JKM) 13.40 13.20 46.99 34.11 8.95
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 9 6 6 19 26
U.S. GFS CDDs 167 199 154 146 128
U.S. GFS TDDs 176 205 160 165 154
LSEG U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 102.1 102.1 102.7 100.0 92.6
U.S. Imports from Canada 7.2 7.3 7.5 8.6 7.8
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 109.3 109.4 110.2 108.6 100.4
U.S. Demand (bcfd)
U.S. Exports to Canada 1.5 2.0 2.0 2.2 2.4
U.S. Exports to Mexico 7.0 7.2 7.1 5.5 5.6
U.S. LNG Exports 12.5 13.0 12.8 11.0 6.5
U.S. Commercial 4.5 4.5 4.7 4.5 4.9
U.S. Residential 3.6 3.6 3.7 3.6 3.9
U.S. Power Plant 46.0 42.0 42.1 41.3 34.9
U.S. Industrial 21.6 21.5 21.5 21.4 21.5
U.S. Plant Fuel 5.0 5.0 5.1 5.0 5.0
U.S. Pipe Distribution 2.2 2.1 2.1 2.2 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 83.1 78.9 79.4 78.1 72.5
Total U.S. Demand 104.1 101.1 101.3 96.8 87.0
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2022 2021 2020
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 83 83 107 81 103
Jan-Jul 77 77 102 79 98
Oct-Sep 76 76 103 81 95
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Sep 8 Sep 1 Aug 25 Aug 18 Aug 1
Wind 11 6 7 7 7
Solar 4 4 4 4 4
Hydro 5 6 5 6 5
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 41 45 45 45 45
Coal 18 19 20 19 19
Nuclear 18 18 17 17 17
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub <NG-W-HH-SNL> 2.60 2.70
Transco Z6 New York <NG-CG-NY-SNL> 2.09 1.84
PG&E Citygate <NG-CG-PGE-SNL> 3.45 3.33
Eastern Gas (old Dominion South) <NG-PCN-APP-SNL> 1.66 1.64
Chicago Citygate <NG-CG-CH-SNL> 2.32 2.35
Algonquin Citygate <NG-CG-BS-SNL> 2.55 1.38
SoCal Citygate <NG-SCL-CGT-SNL> 2.59 2.61
Waha Hub <NG-WAH-WTX-SNL> 1.85 1.98
AECO <NG-ASH-ALB-SNL> 1.77 1.81
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day
New England <EL-PK-NPMS-SNL> 74.75 20.25
PJM West <EL-PK-PJMW-SNL> 75.75 26.25
Ercot North <EL-PK-ERTN-SNL> 251.00 94.75
Mid C <EL-PK-MIDC-SNL> 55.00 53.83
Palo Verde <EL-PK-PLVD-SNL> 33.50 34.75
SP-15 <EL-PK-SP15-SNL> 34.25 34.75
