U.S. natgas futures boosted by outlook for warmer-than-usual weather

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U.S. natural gas futures hit a two-week high on Monday on forecasts of warmer-than-usual

weather in the next two weeks, which could increase cooling demand and keep storage injections lower than

normal.

U.S. front-month gas futures for June delivery rose 23.1 cents, or 3.2%, to settle at $7.475 per

million British thermal units (mmBtu). Prices earlier hit a peak not seen since April 19 at $7.553 per mmBtu.

“The fear for this market is we’re going to flip a switch and go from winter, which is heating degree days

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to cooling degree days, overnight. … Supplies are below average,” said Phil Flynn, an analyst at Price

Futures Group.

There also are expectations that the United States is going to continue to export record amounts of LNG,

further lending support to prices, Flynn added.

According to data provider Refinitiv, temperatures over the next two weeks are estimated to be slightly

warmer than usual with 84 cooling degree days (CDDs) projected, compared with a 30-year average of 64 CDDs for

the period.

CDDs, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average

temperature is above 65 degrees Fahrenheit (18 degrees Celsius).

U.S. gas futures have soared nearly 100% so far this year, with much higher prices in Europe keeping

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demand for U.S. LNG near record highs as several countries try to wean themselves off Russian gas after Russia

invaded Ukraine on Feb. 24.

European Union energy ministers on Monday held crisis talks on Russia’s demand that foreign buyers pay for

gas in roubles or lose their supply, while the bloc prepares a ban on Russian oil, with possible exemptions

for some wary countries.

Russia supplies 40% of the EU’s gas and 26% of its oil imports.

Gas was trading around $34.5 per mmBtu in Europe and $24.53 in Asia.

The U.S. gas market remains mostly shielded from those much higher global prices because the United States

is the world’s top gas producer, with all the fuel it needs for domestic use while capacity constraints

inhibit exports of more LNG no matter how high global prices rise.

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Refinitiv said average gas output in the U.S. Lower 48 states rose to 94.5 billion cubic feet per day

(bcfd) in April from 93.7 bcfd in March. That compares with a monthly record of 96.3 bcfd in December 2021.

“Production growth, although has been delayed over time, I think it is around the corner and you’re gonna

start to see production volumes pick up over the summer months,” said Daniel Myers, market analyst at Gelber &

Associates in Houston, adding that it could reduce the current storage deficit and limit price increases.

Week ended Week ended Year ago Five-year

Apr 29 Apr 22 Apr 29 average

(Forecast) (Actual) Apr 29

U.S. weekly natgas storage change (bcf): +62 +40 +53 +78

U.S. total natgas in storage (bcf): 1,552 1,490 1,949 1,873

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U.S. total storage versus 5-year average -17.1% -17.0%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2021 (2017-2021)

Henry Hub 7.25 6.86 2.96 3.73 2.89

Title Transfer Facility (TTF) 34.11 31.09 8.77 16.04 7.49

Japan Korea Marker (JKM) 24.53 24.82 9.65 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD) 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 74 85 97 87 86

U.S. GFS CDDs 84 79 51 65 64

U.S. GFS TDDs 158 164 148 152 150

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

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U.S. Lower 48 Dry Production 93.7 94.1 94.4 92.0 83.9

U.S. Imports from Canada 8.8 8.6 8.7 7.4 7.6

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0

Total U.S. Supply 102.5 102.7 103.0 99.4 92.5

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 3.2 3.4 2.3

U.S. Exports to Mexico 6.3 6.2 6.1 6.0

U.S. LNG Exports 12.2 12.1 12.2 11.4

U.S. Commercial 7.7 6.5 5.9 6.0

U.S. Residential 10.0 7.7 6.4 6.7

U.S. Power Plant 25.4 26.9 27.9 25.6

U.S. Industrial 22.1 21.2 21.0 22.0

U.S. Plant Fuel 4.6 4.6 4.7 4.6

U.S. Pipe Distribution 1.9 1.8 1.8 1.9

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1

Total U.S. Consumption 71.8 68.9 67.9 66.9

Total U.S. Demand 93.2 90.4 89.6 86.6

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

Week ended Week ended Week ended Week ended Week ended

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May 6 Apr 29 Apr 22 Apr 15 Apr 8

Wind 17 16 16 17 15

Solar 4 4 4 4 4

Hydro 6 7 7 7 8

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 32 33 33 32 33

Coal 18 19 19 19 19

Nuclear 20 19 19 19 19

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

Hub Current Day Prior Day

Henry Hub 6.84 6.97

Transco Z6 New York 6.00 6.00

PG&E Citygate 7.70 7.62

Dominion South 5.94 6.05

Chicago Citygate 6.66 6.58

Algonquin Citygate 6.53 6.44

SoCal Citygate 6.78 6.80

Waha Hub 6.45 6.30

AECO 6.93 5.67

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

Hub Current Day

New England 58.75 64.75

PJM West 33.00 44.50

Ercot North 58.60 57.25

Mid C 75.67 93.00

Palo Verde 36.00 54.75

SP-15 36.75 58.50

(Reporting by Eileen Soreng and Ashitha Shivaprasad in Bengaluru; Editing by Kirsten Donovan, Will Dunham and

Paul Simao)