Freeze-offs rising but not close to levels seen last winter
LNG feedgas hits daily record high on Monday
Meteorologists forecast coldest days coming next week
Cold weather boosts spot gas prices to highest levels since January 2024
By Scott DiSavino
Jan 7 (Reuters) - U.S. natural gas futures fell about 4% on Tuesday on forecasts for less heating demand this week than previously expected and lower output reductions from freezing wells so far this winter than in past years.
Energy analysts, however, said spot prices have already soared to their highest levels since last January and noted that futures could spike with the coldest weather of this winter still expected next week.
In addition to winter storms, energy traders said prices could climb in coming days if more oil and gas wells and pipes freeze, an occurrence known in the energy industry as freeze-offs, and with the amount of gas flowing to liquefied natural gas $(LNG)$ export plants already at a record high and on track to rise higher as new units enter service.
Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange were down 14.8 cents, or 4.0%, to $3.524 per million British thermal units (mmBtu) at 8:37 a.m. EST (1337 GMT). On Monday, the contract jumped 9% to close at its highest price since Dec. 30.
Extreme cold this week boosted spot gas prices to the highest levels since January 2024 in hubs across the country, including the Waha NG-WAH-WTX-SNL in West Texas, the Eastern Gas hub NG-PCN-APP-SNL in Pennsylvania, the U.S. Henry Hub benchmark NG-W-HH-SNL in Louisiana, the Southern California border NG-SCL-CGT-SNL, Chicago NG-CG-CH-SNL and New York NG-CG-NY-SNL.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states has slid to 103.3 billion cubic feet per day (bcfd) so far in January, down from 103.8 bcfd in December. That compares with a record 105.3 bcfd in December 2023.
But since output hit a 10-month high of 106.0 bcfd on Dec. 30, supplies were on track to drop by around 6.6 bcfd to a preliminary eight-week low of 99.4 bcfd on Tuesday due mostly to freeze-offs.
Those output declines so far this year were much smaller than in previous winters. But with the coldest weather still to come, analysts said freeze-offs would likely increase in coming days.
In past winters, freeze-offs slashed gas output by around 16.5 bcfd from Jan. 8-16 in 2024, 19.4 bcfd from Dec. 21-24 in 2022 and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.
Meteorologists projected weather in the Lower 48 states would remain colder than normal through Jan. 22, with the coldest days now expected next week.
With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 146.2 bcfd this week to 148.8 bcfd next week. The forecast for this week was lower than LSEG's outlook on Monday, while its forecast for next week was higher.
On a daily basis, LSEG projected total gas use could reach 155.8 bcfd on Jan. 14, which would fall well short of the daily record of 168.4 bcfd on Jan. 16, 2024.
The amount of gas flowing to the eight big U.S. LNG export plants has risen to an average of 15.1 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 2023.
On a daily basis, LNG feedgas hit a record 15.3 bcfd on Monday, topping the prior all-time high of 15.2 bcfd on Jan. 3, as flows to Cheniere Energy's LNG.N 1.5-bcfd Stage 3 expansion under construction at the existing 2.4-bcfd Corpus Christi plant in Texas boosted total flows to the plant to a 12-month high of 2.5 bcfd.
Week ended Jan 3 Forecast | Week ended Dec 27 Actual | Year ago Jan 3 | Five-year average Jan 3 | ||
U.S. weekly natgas storage change (bcf): | -77 | -116 | -140 | -67 | |
U.S. total natgas in storage (bcf): | 3,336 | 3,413 | 3,340 | 3,192 | |
U.S. total storage versus 5-year average | 4.5% | 4.7% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2024 | Five-Year Average (2019-2023) |
Henry Hub NGc1 | 3.57 | 3.67 | 2.72 | 2.41 | 3.52 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 14.15 | 14.36 | 9.55 | 10.95 | 15.47 |
Japan Korea Marker (JKM) JKMc1 | 14.29 | 14.36 | 10.32 | 11.89 | 15.23 |
LSEG Heating $(HDD.UK)$, Cooling $(CDD.AU)$ 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 | 529 | 510 | 512 | 442 | 446 |
U.S. GFS CDDs | 0 | 1 | 1 | 3 | 3 |
U.S. GFS TDDs | 529 | 511 | 513 | 445 | 449 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2020-2024)Average For Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 105.6 | 102.6 | 102.7 | 105.5 | 96.7 |
U.S. Imports from Canada | 9.4 | 10.1 | 9.4 | N/A | 9.1 |
U.S. LNG Imports | 0.1 | 0.0 | 0.0 | 0.0 | 0.2 |
Total U.S. Supply | 114.9 | 113.0 | 112.1 | N/A | 106.0 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 3.8 | 2.5 | 2.7 | N/A | 3.0 |
U.S. Exports to Mexico | 5.0 | 5.3 | 5.4 | N/A | 5.6 |
U.S. LNG Exports | 14.3 | 14.5 | 14.6 | 14.7 | 11.6 |
U.S. Commercial | 13.5 | 20.3 | 20.7 | 16.5 | 16.4 |
U.S. Residential | 21.6 | 34.8 | 35.9 | 27.6 | 28.4 |
U.S. Power Plant | 28.2 | 33.3 | 33.9 | 38.1 | 31.4 |
U.S. Industrial | 24.5 | 26.9 | 27.1 | 25.9 | 25.7 |
U.S. Plant Fuel | 5.2 | 5.1 | 5.1 | 5.2 | 5.2 |
U.S. Pipe Distribution | 2.5 | 3.3 | 3.4 | 2.6 | 4.1 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 |
Total U.S. Consumption | 95.8 | 123.9 | 126.2 | 116.0 | 111.4 |
Total U.S. Demand | 118.9 | 146.2 | 148.8 | N/A | 131.6 |
N/A is Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam (Fiscal year ending Sep 30) | 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 | 89 | 90 | 74 | 83 | 107 |
Jan-Jul | 89 | 89 | 76 | 77 | 102 |
Oct-Sep | 91 | 91 | 77 | 76 | 103 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Jan 10 | Week ended Jan 3 | 2024 | 2023 | 2022 | |
Wind | 11 | 13 | 11 | 10 | 11 |
Solar | 3 | 4 | 5 | 4 | 3 |
Hydro | 6 | 7 | 6 | 6 | 6 |
Other | 1 | 1 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 37 | 36 | 42 | 41 | 38 |
Coal | 22 | 18 | 16 | 17 | 21 |
Nuclear | 21 | 22 | 19 | 19 | 19 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 4.05 | 3.40 | |||
Transco Z6 New York NG-CG-NY-SNL | 11.47 | 4.30 | |||
PG&E Citygate NG-CG-PGE-SNL | 3.99 | 3.24 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 3.56 | 3.00 | |||
Chicago Citygate NG-CG-CH-SNL | 4.00 | 3.33 | |||
Algonquin Citygate NG-CG-BS-SNL | 17.75 | 13.75 | |||
SoCal Citygate NG-SCL-CGT-SNL | 4.83 | 3.82 | |||
Waha Hub NG-WAH-WTX-SNL | 4.05 | 2.69 | |||
AECO NG-ASH-ALB-SNL | 1.22 | 1.20 | |||
ICE U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England E-NEPLMHP-IDX | 164.88 | 128.50 | |||
PJM West E-PJWHDAP-IDX | 76.88 | 56.92 | |||
Mid C W-MIDCP-IDX | 46.22 | 39.08 | |||
Palo Verde W-PVP-IDX | 43.92 | 34.88 | |||
SP-15 W-SP15-IDX | 38.53 | 40.00 |
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 terminalFor graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.htmlFor next-day SNL U.S. gas prices, see: 0#SNL-NGFor next-day SNL U.S. power prices, see: 0#SNL-PWRFor U.S. natgas price and storage polls, see: NGAS/POLLFor U.S. nuclear power outages, see: NUKE/For U.S. Northwest hydro power report, see: NWRFCFor U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44For the U.S. natural gas speed guide, see: USGASFor the U.S. power speed guide, see: USPOWERTo 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#3CFTC023651NYMEX Henry Hub futures only 0#1CFTC023651ICE Henry Hub options and futures combined 0#3CFTC023391NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565BNYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C
(Reporting by Scott DiSavino; Editing by Paul Simao)
((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net/))
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