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Aug 31 (Reuters) - U.S. natural gas futures slid about 2% on Thursday on forecasts for less demand in coming weeks due to a seasonal cooling of the weather.
That price decline came ahead of a federal report expected to show a much smaller-than-usual storage build last week when power generators burned lots of gas to keep air conditioners humming during an extreme heat wave blanketing the central part of the U.S.
Analysts forecast U.S. utilities added 25 billion cubic feet (bcf) of gas into storage during the week ended Aug. 25. That compares with an increase of 61 bcf in the same week last year and a five-year (2018-2022) average increase of 51 bcf.
If correct, last week's increase would boost stockpiles to 3.108 trillion cubic feet (tcf), or 8.4% above the five-year average of 2.866 tcf for the time of year.
Front-month gas futures for October delivery on the New York Mercantile Exchange fell 4.8 cents, or 1.7%, to $2.748 per million British thermal units (mmBtu) at 10:00 a.m. EDT (1400 GMT). On Wednesday, the contract closed at its highest since Aug. 9.
More than 313,000 homes and businesses were still without power in Florida, Georgia and the Carolinas on Thursday after Hurricane Idalia slammed into Florida early on Wednesday, according to data from PowerOutage.us. Those totals were down from peaks of around 288,000 outages in Florida and over 217,000 out in Georgia.
Idalia was currently a tropical storm with maximum sustained winds of 60 miles per hour (95 kph) and was located in the Atlantic Ocean about 45 miles south-southwest of Wilmington, North Carolina, according to the U.S. National Hurricane Center (NHC). It was heading east-northeast away from the coast and further into the ocean, the NHC said.
Despite the end of the heat wave across much of the country, Texas remained hot and homes and businesses there kept their air conditioners cranked up to escape the heat.
The state's power grid operator, the Electric Reliability Council of Texas (ERCOT), urged consumers to conserve energy for a sixth time in the past seven days on Wednesday due in part to "a high level of unexpected thermal generation outages and forecasted low wind generation."
But for Thursday, ERCOT forecast the power situation would be less tight than over the past week with supplies expected to exceed demand by almost 5,000 megawatts (MW) after the sun goes down and solar power stops working at around 8 p.m. local time. Earlier in the week, demand was expected to exceed supplies by around 800 MW at around 8 p.m. on Tuesday before a call for conservation.
Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. 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 average gas output in the lower 48 U.S. states held at 101.1 bcfd so far in August, the same as in July. That compares with a monthly record of 102.2 bcfd in May.
On a daily basis, output was on track to drop by 1.5 bcfd to a preliminary seven-week low 99.5 bcfd on Thursday due mostly to reductions in Texas and Pennsylvania. That would be the biggest daily decline in production since mid August but energy traders noted that preliminary data is often revised.
Even though the heat wave broke, meteorologists still forecast the weather in the lower 48 U.S. states will remain mostly hotter than normal through at least Sept. 15.
But with the weather turning seasonally cooler, LSEG forecast U.S. gas demand, including exports, would slide from 104.2 bcfd this week to 101.9 bcfd next week. Those forecasts were similar to LSEG's outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants fell from an average of 12.7 bcfd in July to 12.3 bcfd so far in August due mostly to reductions at Cheniere Energy's Sabine Pass in Louisiana and Corpus Christi in Texas. That compares with a monthly record of 14.0 bcfd in April.
Week ended Week ended Year ago Five-year
Aug 25 Aug 18 Aug 25 average
Forecast Actual Aug 25
U.S. weekly natgas storage change (bcf): 25 32 61 51
U.S. total natgas in storage (bcf): 3,108 3,083 2,631 2,866
U.S. total storage versus 5-year average 8.4% 9.5%
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 2.78 2.80 8.78 6.54 2.89
Title Transfer Facility (TTF) 10.80 11.29 69.68 40.50 7.49
Japan Korea Marker (JKM) 13.41 13.39 53.22 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 6 6 3 7 17
U.S. GFS CDDs 200 201 189 165 145
U.S. GFS TDDs 206 207 192 172 162
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 101.4 100.9 101.1 98.8 92.0
U.S. Imports from Canada 7.2 7.2 7.4 8.4 8.1
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1
Total U.S. Supply 108.5 108.1 108.5 107.2 100.8
U.S. Demand (bcfd)
U.S. Exports to Canada 1.4 1.5 1.5 2.1 2.5
U.S. Exports to Mexico 6.9 7.0 6.8 5.1 5.6
U.S. LNG Exports 11.8 12.5 12.8 10.4 6.1
U.S. Commercial 4.5 4.5 4.5 4.5 4.5
U.S. Residential 3.6 3.6 3.6 3.6 3.4
U.S. Power Plant 46.9 46.5 44.2 42.9 41.2
U.S. Industrial 21.4 21.4 21.3 21.3 21.5
U.S. Plant Fuel 5.0 5.0 5.0 5.0 5.0
U.S. Pipe Distribution 2.2 2.2 2.2 2.2 2.3
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 83.7 83.3 80.9 79.6 78.0
Total U.S. Demand 103.9 104.2 101.9 97.2 92.2
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 1 Aug 25 Aug 18 Aug 11 Aug 4
Wind 4 7 7 7 7
Solar 4 4 4 4 4
Hydro 5 5 6 5 5
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 47 45 45 45 45
Coal 20 20 19 19 20
Nuclear 18 17 17 17 17
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub <NG-W-HH-SNL> 2.48 2.50
Transco Z6 New York <NG-CG-NY-SNL> 1.37 1.42
PG&E Citygate <NG-CG-PGE-SNL> 4.46 4.80
Eastern Gas (old Dominion South) <NG-PCN-APP-SNL> 1.31 1.25
Chicago Citygate <NG-CG-CH-SNL> 2.33 2.32
Algonquin Citygate <NG-CG-BS-SNL> 1.43 1.45
SoCal Citygate <NG-SCL-CGT-SNL> 3.62 6.49
Waha Hub <NG-WAH-WTX-SNL> 2.21 2.32
AECO <NG-ASH-ALB-SNL> 1.94 1.93
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day
New England <EL-PK-NPMS-SNL> 25.75 31.75
PJM West <EL-PK-PJMW-SNL> 24.50 31.00
Ercot North <EL-PK-ERTN-SNL> 150.00 415.00
Mid C <EL-PK-MIDC-SNL> 69.00 68.75
Palo Verde <EL-PK-PLVD-SNL> 53.00 93.25
SP-15 <EL-PK-SP15-SNL> 66.50 97.00
