(Adds latest prices)
By Scott DiSavino
May 3 (Reuters) - U.S. natural gas futures jumped by about 5% on Friday and a record 33% for the week to a 13-week high as the amount of gas flowing to liquefied natural gas export plants increased with the return of Freeport LNG in Texas and on forecasts for much warmer weather next week, especially in Texas, that will prompt power generators to burn more gas to meet air conditioning demand.
In other LNG news, Cheniere
Energy
, the nation's biggest LNG company, said it does not anticipate any long outages at its export plants this summer and noted the expansion of its Corpus Christi plant in Texas was still on track to produce first LNG (at least in test mode) by the end of 2024.
Front-month gas futures for June delivery on the New York Mercantile Exchange rose 10.7 cents, or 5.3%, to settle at $2.142 per million British thermal units (mmBtu), their highest close since Jan. 29.
That put the contract up by a record 33% for the week after it lost roughly 10% over the prior three weeks. That topped the prior weekly record high of 29% in October 1990.
U.S. gas production was down about 9% so far in 2024 after several energy firms, including EQT and Chesapeake Energy , delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in February and March.
EQT is currently the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy .
Traders noted that if U.S. crude prices continue to decline - crude futures were down about 7% this week - some drillers could cut back on oil production in shale basins that also produce a lot of associated gas, like the Permian in Texas and New Mexico and the Bakken in North Dakota.
There are signs this may already be occurring in some parts of the U.S. where the total oil and gas rig count fell this week to its lowest since January 2022, according to energy services provider
Baker Hughes
.
Any reduction in associated gas could cause overall gas output to collapse since high crude prices enable energy firms to keep making money by drilling for oil even when gas prices are negative like they were at the Waha hub in the Permian Shale in West Texas in early to mid-April.
In the spot market, meanwhile, analysts said upcoming gas pipeline maintenance on U.S. energy company Kinder Morgan's Permian Highway Pipeline from May 7-12 and Gulf Coast Express from May 14-21 could push average next-day gas prices at the Waha back into negative territory for the first time since mid-April.
Reductions on those and other pipes in Texas over the past month or so trapped gas in the
Permian
and helped push Waha prices below zero for several days last month.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 96.3 billion cubic feet per day (bcfd) so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023.
LSEG forecast gas demand in the Lower 48, including exports, would rise from 91.4 bcfd this week to 92.3 bcfd next week before sliding to 89.5 bcfd in two weeks. The forecasts for this week and next week were lower than LSEG's outlook on Thursday.
Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.2 bcfd so far in May with the slow return to service of Freeport LNG's 2.1-bcfd plant in Texas. That compares with a monthly record of 14.7 bcfd in December.
Week ended Week ended Year ago Five-year
May 3 Apr 26 May 3 average
Forecast Actual May 3
U.S. weekly natgas storage change (bcf): +89 +59 +71 +81
U.S. total natgas in storage (bcf): 2,573 2,484 2,119 1,923
U.S. total storage versus 5-year average 33.8% 34.9%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year
Last Year Average Average
2023 (2018-2022)
Henry Hub 2.03 2.04 2.30 2.66 3.60
Title Transfer Facility (TTF) 9.84 9.68 9.97 13.04 14.39
Japan Korea Marker (JKM) 10.41 10.24 10.45 14.39 14.31
LSEG Heating $(HDD.UK)$, Cooling $(CDD.AU)$ 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 55 59 89 96 80
U.S. GFS CDDs 76 80 59 59 67
U.S. GFS TDDs 131 139 148 155 147
LSEG U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year (2019-2023)
Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 97.0 96.7 96.5 103.1 94.4
U.S. Imports from Canada 7.1 7.2 6.6 8.2 7.5
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 104.1 103.9 103.2 111.3 101.9
U.S. Demand (bcfd)
U.S. Exports to Canada 2.1 2.1 1.9 2.1 2.4
U.S. Exports to Mexico 6.8 5.8 6.1 6.1 5.6
U.S. LNG Exports 11.7 12.3 12.2 13.4 8.8
U.S. Commercial 7.8 5.9 5.6 7.2 5.8
U.S. Residential 10.1 6.3 5.9 9.2 6.9
U.S. Power Plant 28.6 30.3 32.1 29.1 28.4
U.S. Industrial 23.3 21.8 21.7 22.0 21.5
U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.8
U.S. Pipe Distribution 2.0 1.9 1.9 1.9 1.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 76.9 71.1 72.1 74.3 69.4
Total U.S. Demand 97.4 91.4 92.3 95.9 86.2
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 78 80 83 107 81
Jan-Jul 79 81 77 102 79
Oct-Sep 80 82 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
May 3 Apr 26 Apr 19 Apr 12 Apr 5
Wind 15 16 16 16 15
Solar 6 6 6 6 5
Hydro 7 7 7 7 7
Other 2 1 2 1 1
Petroleum 0 0 0 0 0
Natural Gas 39 37 37 37 38
Coal 13 13 13 13 13
Nuclear 19 19 19 20 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 1.66 1.63
Transco Z6 New York 1.37 1.40
PG&E Citygate 2.35 2.23
Eastern Gas (old Dominion South) 1.32 1.37
Chicago Citygate 1.44 1.41
Algonquin Citygate 1.41 1.40
SoCal Citygate 1.50 1.47
Waha Hub 0.96 0.58
AECO 1.00 0.97
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 24.00 25.25
PJM West 37.00 41.75
Ercot North 40.25 82.00
Mid C 60.00 59.50
Palo Verde 8.50 3.00
SP-15 9.50 9.25
(Reporting by Scott DiSavino; editing by Jonathan Oatis)
((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))
((For gas data on LSEG's Eikon 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 Eikon terminal For graphics on Baker Hughes rig counts, see: For next-day SNL U.S. gas prices, see: For next-day SNL U.S. power prices, see: For U.S. natgas price and storage polls, see: For U.S. nuclear power outages, see: For U.S. Northwest hydro power report, see: For U.S./Canada natural gas rig count vs Henry Hub futures price, see: For the U.S. natural gas speed guide, see: For the U.S. power speed guide, see: To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined ) plus (ICE Henry Hub options and futures combined divided by four) plus (NYMEX Henry Hub swaps options and futures combined divided by four) plus (NYMEX Henry Hub penultimate gas swaps divided by four) NYMEX Henry Hub options and futures combined NYMEX Henry Hub futures only ICE Henry Hub options and futures combined NYMEX Henry Hub swaps options and futures combined NYMEX Henry Hub Penultimate gas swaps ))
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