S&P GSCI NATURAL GAS INDEX
By Scott DiSavino
Jan 3 (Reuters) - U.S. natural gas futures gained about 2% to a one-week high on Wednesday on a decline in daily output
and forecasts for colder weather in mid January than previously expected.
That price increase came despite forecasts for milder weather and lower heating demand this week and next than previously
expected, and a small decline in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants.
Traders noted mild weather this week and next should enable utilities to keep pulling less gas from storage in coming weeks
because heating demand is currently lower than usual.
Analysts forecast there was about 11.6% more gas in storage than normal at this time of year.
Front-month gas futures for February delivery on the New York Mercantile Exchange were up 4 cents, or 1.6%, at $2.608
per million British thermal units (mmBtu) at 8:47 a.m. EST (1347 GMT), putting the contract on track for its highest close since
Dec. 27.
A lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 44.6%, the
lowest since September 2021 for a second day in a row.
Historic daily volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. Historic
volatility has averaged 44.8% so far this year, versus 70.5% in 2023 and a five-year (2019-2023) average of 64.3%.
Even though late January is usually the coldest part of the year, many traders said winter futures for November-March likely
already peaked at $3.608 per mmBtu on Nov. 1 due primarily to recent record production and ample supplies of gas in storage.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the lower 48 U.S. states has slid to 107.5 billion cubic feet per day (bcfd) so
far in January, down from a monthly record of 108.5 bcfd in December.
Meteorologists projected the weather would remain mostly near to warmer than normal through Jan. 12 before turning colder than
normal from Jan. 13-18.
With colder weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 132.7 bcfd this
week to 133.7 bcfd next week. Those forecasts were lower than LSEG's outlook on Tuesday.
U.S. pipeline exports to Mexico have fallen to an average of 4.2 bcfd so far in January, down from 4.6 bcfd in December and a
monthly record 7.0 bcfd in August.
Analysts expect exports to Mexico to rise in coming months once U.S.-based New Fortress Energy's plant in Altamira in
Mexico starts pulling in U.S. gas to turn into LNG for export.
Gas flows to the seven big U.S. LNG export plants have slid to an average of 14.6 bcfd so far in January, down from a monthly
record of 14.7 bcfd in December.
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global
prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine.
Gas was trading around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $11 at
the Japan Korea Marker (JKM) in Asia.
Week ended Week ended Year ago Five-year
Dec 29 Dec 22 Dec 29 average
Forecast Actual Dec 29
U.S. weekly natgas storage change (bcf): -56 -87 -219 -97
U.S. total natgas in storage (bcf): 3,434 3,490 2,923 3,077
U.S. total storage versus 5-year average 11.6% 10.0%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2023 (2018-2022)
Henry Hub 2.60 2.57 3.42 2.66 3.60
Title Transfer Facility (TTF) 10.33 9.70 19.79 13.04 14.39
Japan Korea Marker (JKM) 11.50 11.52 24.34 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 30-Year
Norm Norm
U.S. GFS HDDs 458 430 328 439 444
U.S. GFS CDDs 1 1 5 4 3
U.S. GFS TDDs 459 431 333 443 447
LSEG U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year (2019-2023)
Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 108.8 108.0 108.2 100.7 93.8
U.S. Imports from Canada8 8.5 9.0 8.8 8.7 9.3
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3
Total U.S. Supply 117.3 117.0 117.0 109.4 103.4
U.S. Demand (bcfd)
U.S. Exports to Canada 3.4 3.0 2.9 3.1 2.7
U.S. Exports to Mexico 5.4 4.7 4.7 5.4 5.3
U.S. LNG Exports 14.7 14.6 14.0 11.9 8.9
U.S. Commercial 12.8 15.6 16.6 13.4 16.6
U.S. Residential 20.3 25.9 28.3 21.4 28.6
U.S. Power Plant 31.0 35.0 33.3 28.2 29.5
U.S. Industrial 24.3 25.6 25.6 24.0 25.6
U.S. Plant Fuel 5.4 5.3 5.3 5.4 5.4
U.S. Pipe Distribution 2.6 2.9 3.0 2.9 2.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 96.4 110.4 112.2 95.4 108.7
Total U.S. Demand 120.0 132.7 133.7 115.8 125.6
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 78 77 83 107 81
Jan-Jul 78 77 77 102 79
Oct-Sep 79 79 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jan 5 Dec 29 Dec 22 Dec 15 Dec 8
Wind 9 11 11 11 12
Solar 3 2 2 3 3
Hydro 6 7 6 6 5
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 40 40 41 41 40
Coal 18 16 18 17 17
Nuclear 21 22 20 20 21
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 2.55 2.58
Transco Z6 New York 2.35 2.15
PG&E Citygate 3.81 3.55
Eastern Gas (old Dominion South) 1.92 1.82
Chicago Citygate 2.40 2.13
Algonquin Citygate 2.72 3.10
SoCal Citygate 3.61 2.97
Waha Hub 1.99 1.60
AECO 1.31 1.60
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 41.50 31.75
PJM West 36.25 24.25
Ercot North 25.75 19.50
Mid C 72.00 70.00
Palo Verde 44.25 33.00
SP-15 45.00 43.00
(Reporting by Scott DiSavino; Editing by Jan Harvey)
US natgas prices gain 2% to one-week high on colder January forecasts
January 03, 2024 at 09:16 am EST
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