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US natgas prices hold near 21-week high supported by heat, new pipeline weighs

U.S. natural gas futures held near a 21-week high on Monday, supported by hot weather this week which should boost demand for air conditioning, but pressured by expectations that gas supplies will soon rise with the giant Mountain Valley Pipeline nearing completion.

Gas futures were trading up by more than 5% but retreated after Mountain Valley Pipeline said the project from West Virginia to Virginia was "mechanically complete" and being "packed with gas". The company sought permission from the U.S. Federal Energy Regulatory Commission (FERC), to place the project into service by Tuesday, June 11.

Analysts predicted FERC would probably authorize the project but not necessarily by Tuesday.

Front-month gas futures NG1! for July delivery on the New York Mercantile Exchange fell 1.2 cents to settle at $2.906 per million British thermal units. On Friday, the contract closed at its highest level since Jan. 12.

Traders said futures prices were also pressured by small increases in output in recent weeks and the tremendous oversupply of gas still in storage.

Analysts said current gas stockpiles were still around 24% above normal levels for this time of year.

SUPPLY AND DEMAND

LSEG said gas output in the Lower 48 U.S. states has slipped to an average of 98.0 billion cubic feet per day (bcfd) so far in June, down from 98.1 bcfd in May. That compares with a monthly record of 105.5 bcfd in December 2023.

On a daily basis, output was on track to slide by around 0.5 bcfd to a preliminary three-week low of 97.2 bcfd on Monday, down from 97.7 bcfd on Sunday. That output, however, was up about 0.6 bcfd from a 15-week low of 96.5 bcfd on May 1.

Analysts said the increase since May 1 was a sign producers were slowly boosting output following the 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24.

Overall, U.S. gas production remained down around 8% so far in 2024 after several energy firms, including EQT EQT and Chesapeake Energy CCHK, delayed well completions and cut drilling activities when prices fell in February and March.

Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 25 except for some near-normal days from June 10-12.

LSEG forecast gas demand in the Lower 48, including exports, would jump from 95.1 bcfd this week to 99.2 bcfd next week. The forecast for this week was higher than LSEG's outlook on Friday.

Gas flows to the seven big U.S. LNG export plants have risen to 13.1 bcfd so far in June, up from 12.9 bcfd in May.

That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing maintenance at several plants, including Cheniere Energy's LNG Sabine Pass and Venture Global's Calcasieu Pass in Louisiana.

Week ended Jun 7 Forecast

Week ended May 31 Actual

Year ago Jun 7

Five-year average

Jun 7

U.S. weekly natgas storage change (bcf):

+75

+98

+90

+89

U.S. total natgas in storage (bcf):

2,968

2,893

2,610

2,401

U.S. total storage versus 5-year average

23.6%

25.1%

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 NG1!

3.02

2.92

2.47

2.66

3.60

Title Transfer Facility (TTF) (TRNLTTFMc1)

10.22

10.48

10.32

13.04

14.39

Japan Korea Marker (JKM) (JKMc1)

11.97

11.99

10.61

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

8

10

14

12

13

U.S. GFS CDDs

198

177

138

160

156

U.S. GFS TDDs

206

187

152

172

169

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

98.3

97.6

97.9

102.7

94.7

U.S. Imports from Canada

7.3

7.1

6.8

N/A

7.8

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.0

Total U.S. Supply

105.6

104.8

104.7

N/A

112.5

U.S. Demand (bcfd)

U.S. Exports to Canada

1.8

1.7

1.7

N/A

2.3

U.S. Exports to Mexico

6.7

6.5

6.9

N/A

6.0

U.S. LNG Exports

13.2

13.0

13.0

11.3

8.5

U.S. Commercial

4.5

4.5

4.4

4.5

4.8

U.S. Residential

3.8

3.8

3.7

3.8

4.3

U.S. Power Plant

35.4

37.0

40.7

37.0

36.3

U.S. Industrial

21.6

21.6

21.6

21.2

21.3

U.S. Plant Fuel

4.9

4.8

4.8

4.9

4.9

U.S. Pipe Distribution

1.9

2.0

2.1

1.9

1.9

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

72.2

73.8

77.5

73.4

73.6

Total U.S. Demand

94.0

95.1

99.2

N/A

90.4

N/A is Not Available

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam

Current Day % of Normal Forecast

Prior Day % of Normal Forecast

2023

% of Normal Actual

2022 % of Normal Actual

2021 % of Normal Actual

Apr-Sep

76

77

83

107

81

Jan-Jul

77

77

77

102

79

Oct-Sep

79

79

76

103

81

U.S. weekly power generation percent by fuel - EIA

Week ended Jun 14

Week ended Jun 7

Week ended May 31

Week ended May 24

Week ended May 17

Wind

12

11

11

13

10

Solar

7

6

6

6

6

Hydro

7

7

7

7

8

Other

1

1

1

1

1

Petroleum

0

0

0

0

0

Natural Gas

39

41

40

38

40

Coal

15

15

14

14

14

Nuclear

20

19

20

19

20

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub

Current Day

Prior Day

Henry Hub (NG-W-HH-SNL)

2.46

2.30

Transco Z6 New York (NG-CG-NY-SNL)

1.15

1.38

PG&E Citygate (NG-CG-PGE-SNL)

1.83

1.98

Eastern Gas (old Dominion South) (NG-PCN-APP-SNL)

1.11

1.32

Chicago Citygate (NG-CG-CH-SNL)

1.49

1.71

Algonquin Citygate (NG-CG-BS-SNL)

1.18

1.39

SoCal Citygate (NG-SCL-CGT-SNL)

1.55

1.70

Waha Hub (NG-WAH-WTX-SNL)

0.27

1.36

AECO (NG-ASH-ALB-SNL)

0.61

0.75

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub

Current Day

Prior Day

New England (EL-PK-NPMS-SNL)

23.75

27.50

PJM West (EL-PK-PJMW-SNL)

22.25

29.75

Ercot North (EL-PK-ERTN-SNL)

17.50

23.75

Mid C (EL-PK-MIDC-SNL)

23.50

30.25

Palo Verde (EL-PK-PLVD-SNL)

32.00

30.06

SP-15 (EL-PK-SP15-SNL)

7.00

19.00

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