Oct 4 (Reuters) - U.S. natural gas futures slipped on Friday on expectations that record production will turn the long-standing storage deficit into a surplus in coming weeks, sooner than some analysts had expected.
The price decline came despite forecasts for heating and export demand to rise during that time.
On Thursday, the U.S. Energy Information Administration (EIA) reported a storage build of 112 billion cubic feet for the week ended Sept. 27, which was much bigger than the 105 bcf analyst forecast in a Reuters poll. EIA/GAS
"The supply shortfall against averages has narrowed to only 18 bcf and it appears that a surplus could be established much sooner than we had anticipated," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
Analysts said utilities likely added 88 bcf of gas to storage during the week ended Oct. 4. That compares with an injection of 91 bcf during the same week last year and a five-year (2014-18) average build of 89 bcf for the period.
If correct, that increase would boost stockpiles to 3.405 trillion cubic feet, 0.6% below the five-year average of 3.424 tcf for this time of year.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as much as 33% below that in March 2019. But with production near a record high, analysts said stockpiles should reach a near-normal 3.7 tcf by the end of summer injection season on Oct. 31. NGAS/POLL
Gas production in the lower 48 U.S. states rose to 93.3 billion cubic feet per day on Friday, up from an average of 93.1 bcfd last week, according to Refinitiv data. That compares with an all-time daily high of 93.8 bcfd on Sept. 29.
Front-month gas futures NGc1 for November delivery on the New York Mercantile Exchange were down 2.2 cents, or 0.9%, to $2.307 per million British thermal units at 9:48 a.m. EDT (1348 GMT).
On Thursday, a near 4% price gain broke the record 12-day losing streak for the front-month.
For the week, the contract was on track to fall about 5%, which would put it down for a third week in a row for the first time since August.
Data provider Refinitiv projected gas demand in the lower 48 states would slide from 85.5 bcfd this week to 82.8 bcfd next week as power generator cooling demand falls more quickly than heating use.
In two weeks, however, Refinitiv forecast average demand will increase to 84.6 bcfd as heating use and liquefied natural gas (LNG) exports rise more quickly than power generator cooling demand declines.
Gas flows to LNG export plants eased to 5.8 bcfd on Thursday, down from an average of 6.3 bcfd last week, due to small declines at Cheniere Energy Inc's LNG.A Sabine Pass in Louisiana and Freeport LNG's Freeport in Texas, according to Refinitiv data.
Over the next two weeks, however, Refinitiv projected LNG exports would rise to record highs around 6.8 bcfd when Dominion Energy Inc's D.N Cove Point in Maryland returns to service. ended Week ended Year ago Five-year
Oct 4
average
4(Forecast 27(Actual)
Oct 4
U.S. natgas storage (bcf):
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Two-Week Total Forecast
Current
Prior Day
Prior
10-Year
30-Year
Norm U.S. GFS HDDs
105 U.S. GFS CDDs
50 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
75.5 U.S. Imports from Canada
7.6 U.S. LNG Imports
0.2 Total U.S. Supply
100.3
100.1
U.S. Demand (bcfd) U.S. Exports to Canada
2.4 U.S. Exports to Mexico
3.7 U.S. LNG Exports
1.2 U.S. Commercial
6.6 U.S. Residential
6.8 U.S. Power Plant
25.2 U.S. Industrial
20.5 U.S. Plant Fuel
4.6 U.S. Pipe Distribution
1.9 U.S. Vehicle Fuel
0.1 Total U.S. Consumption
65.7 Total U.S. Demand
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Current
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
Prior Day
New England EL-PK-NPMS-SNL
21.25
27.00
PJM West EL-PK-PJMW-SNL
32.25
40.44
Ercot North EL-PK-ERTN-SNL
42.00
112.50
Mid C EL-PK-MIDC-SNL
31.25
35.50
Palo Verde EL-PK-PLVD-SNL
25.00
26.50
SP-15 EL-PK-SP15-SNL
27.50
30.50