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U.S. natgas futures drop over 5% on moderating weather forecast for late November

Published 2019-11-11, 09:20 a/m
Updated 2019-11-11, 09:35 a/m
© Reuters.  U.S. natgas futures drop over 5% on moderating weather forecast for late November

© Reuters. U.S. natgas futures drop over 5% on moderating weather forecast for late November

Nov 11 (Reuters) - U.S. natural gas futures on Monday were on track for their biggest daily percentage decline since January on moderating weather forecasts for this week and next week.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange (NYMEX) were down 14.3 cents, or 5.1%, to $2.646 per million British thermal units at 9:00 a.m. EDT (1400 GMT), on track for its biggest daily percentage decline since Jan. 28 when the front-month dropped 8.4%.

The U.S. National Weather Service (NWS) forecast temperatures in the Lower 48 U.S. states would switch from colder than normal in the eastern half of the country over the next six to 10 days to warmer than normal during the eight to 14 day period.

Last week when meteorologists were calling for colder weather through late November, speculators cut their net short positions on the NYMEX and Intercontinental Exchange by 86,913 contracts, the most on record, to 86,834, according to Refinitiv data going back to 2010.

Those cold forecasts also caused next-day gas for Monday to rise to its highest since March at the Henry Hub NG-W-HH-SNL benchmark in Louisiana.

But with the latest weather forecasts, data provider Refinitiv projected average gas demand in the Lower 48, including exports, would fall to 107.8 billion cubic feet per day (bcfd) next week from 115.4 bcfd this week.

That is lower than Refinitiv's forecasts on Friday of 109.4 bcfd next week and 116.2 bcfd this week.

Gas flows to liquefied natural gas (LNG) export plants rose to 7.3 bcfd on Sunday from 7.0 bcfd on Saturday, according to Refinitiv data. That was up from last week's average of 7.2 bcfd following the increase in flows to Cheniere Energy Inc's LNG.A Corpus Christi plant in Texas and compares with an all-time daily high of 7.7 bcfd on Nov. 2.

Pipeline flows to Mexico held at 5.4 bcfd for a second day in a row on Sunday, according to Refinitiv data. That compares with an average of 5.5 bcfd last week and an all-time daily high of 5.8 bcfd on Oct. 17.

Analysts said utilities likely added just 8 billion cubic feet (bcf) of gas to storage during the week ended Nov. 8. That compares with an injection of 42 bcf during the same week last year and a five-year (2014-18) average build of 30 bcf for the period. EIA/GAS

If correct, the increase would boost stockpiles to 3.737 trillion cubic feet (tcf), cutting the current surplus over the five-year average of 3.730 tcf to just 0.2% for this time of year.

Earlier this year, the amount of gas in inventory was as much as 33% below the five-year average in March. But record production allowed utilities to inject 2.569 tcf of gas into storage since April 1, turning the deficit into a surplus during the week ended Oct. 11. That was the second biggest amount of gas added during the April-October storage injection season, following 2014's record 2.727 tcf increase, according to federal data.

Gas production in the Lower 48 slipped to 94.8 bcfd on Sunday from 95.1 bcfd on Saturday, according to Refinitiv data. That compares with an average of 94.7 bcfd last week and an all-time daily high of 95.2 bcfd on Nov. 2.

Week ended Week ended Year ago Five-year

Nov. 8

average

8(Forecast) 1(Actual)

Nov. 8

U.S. natgas storage (bcf):

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast

Current Day Prior Day

Prior

10-Year

30-Year

Norm U.S. GFS HDDs

284 U.S. GFS CDDs

9 U.S. GFS TDDs

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current

Next Week This week Five-Yea

last year

Average

Month U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

76.3 U.S. Imports from Canada

7.9 U.S. LNG Imports

0.2 Total U.S. Supply

102.1

102.7

102.6

U.S. Demand (bcfd) U.S. Exports to Canada

2.4 U.S. Exports to Mexico

3.7 U.S. LNG Exports

1.5 U.S. Commercial

10.9 U.S. Residential

16.0 U.S. Power Plant

22.5 U.S. Industrial

22.8 U.S. Plant Fuel

4.7 U.S. Pipe Distribution

2.1 U.S. Vehicle Fuel

0.1 Total U.S. Consumption

79.1 Total U.S. Demand

102.0

115.4

107.8

111.8

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

Current Day Prior Day

Henry Hub NG-W-HH-SNL

Transco Z6 New York NG-CG-NY-SNL

PG&E Citygate NG-CG-PGE-SNL

Dominion South NG-PCN-APP-SNL

Chicago Citygate NG-CG-CH-SNL

Algonquin Citygate NG-CG-BS-SNL

SoCal Citygate NG-SCL-CGT-SNL

Waha Hub NG-WAH-WTX-SNL

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

Current Day Prior Day

New England EL-PK-NPMS-SNL

33.50

42.50

PJM West EL-PK-PJMW-SNL

33.75

39.21

Ercot North EL-PK-ERTN-SNL

31.00

39.25

Mid C EL-PK-MIDC-SNL

38.50

55.00

Palo Verde EL-PK-PLVD-SNL

44.00

54.25

SP-15 EL-PK-SP15-SNL

39.25

55.75

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