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U.S. natgas falls 3% on smaller than expected storage draw, less cold

U.S. natural gas futures fell about 3% on Thursday on a slightly smaller-than-expected storage draw and forecasts for less cold weather and lower gas demand over the next two weeks than previously expected.

The U.S. Energy Information Administration (EIA) said utilities pulled 81 billion cubic feet (bcf) of gas from storage during the week ended Nov. 25.

That was a little less than the 84-bcf draw analysts forecast in a Reuters poll and compares with a decrease of 54 bcf in the same week last year and a five-year (2017-2021) average decline of 34 bcf.

Last week's decrease cut stockpiles to 3.483 trillion cubic feet (tcf), or 2.4% below the five-year average of 3.569 tcf for this time of the year.

Another factor weighing on prices this week has been U.S. government efforts to reduce the risk of a railroad worker strike. A rail strike would cut coal deliveries to power plants and boost the amount of gas burned to produce electricity.

Traders said the wild card, which could boost gas prices later this month was if Freeport LNG's liquefied natural gas (LNG) export plant in Texas returns to service as expected.

The plant was shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired by the company to review the incident and propose corrective actions.

A few ships have been waiting - some for weeks - in the Gulf of Mexico to pick up LNG from Freeport, including Prism Brilliance, Prism Diversity and Prism Courage, according to shipping data from Refinitiv.

Front-month gas futures NG1! for January delivery on the New York Mercantile Exchange fell 19.2 cents, or 2.8%, to settle at $6.738 per million British thermal units (mmBtu).

U.S. gas futures are up about 81% so far this year as much higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine.

Gas was trading at $46 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe (TRNLTTFMc1) and $34 at the Japan Korea Marker (JKM) in Asia (JKMc1).

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U.S. gas futures lag global prices because the United States is the world's top producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from exporting more LNG.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to a record 99.5 bcfd in November, up from 99.2 bcfd in October.

With colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would jump from 115.9 bcfd this week to 123.6 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Wednesday.

In New England, several U.S. senators sent a letter to Energy Secretary Jennifer Granholm to develop a plan to "mitigate the risk of price hikes and a shortage of natural gas, (LNG) and heating oil."

Week ended Nov 25 (Actual)

Week ended

Nov 18 (Actual)

Year ago Nov 25

Five-year average Nov 25

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

-81

-80

-54

-34

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

3,483

3,564

3,572

3,569

U.S. total storage versus 5-year average

-2.4%

-1.1%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2021

Five Year Average (2017-2021)

Henry Hub NG1!

6.99

6.93

3.86

3.73

2.89

Title Transfer Facility (TTF) (TRNLTTFMc1)

46.02

43.09

37.67

16.04

7.49

Japan Korea Marker (JKM) (JKMc1)

33.31

30.51

37.84

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 Norm

30-Year Norm

U.S. GFS HDDs

394

406

305

347

374

U.S. GFS CDDs

7

6

8

6

5

U.S. GFS TDDs

401

412

313

353

379

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

100.1

99.9

100.4

96.3

89.8

U.S. Imports from Canada

91.5

8.5

9.1

9.5

8.9

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.3

Total U.S. Supply

109.2

108.5

109.5

105.8

99.0

U.S. Demand (bcfd)

U.S. Exports to Canada

3.3

3.5

3.7

3.4

3.2

U.S. Exports to Mexico

5.3

5.7

5.6

5.8

5.0

U.S. LNG Exports

12.0

11.8

12.8

11.8

6.9

U.S. Commercial

15.4

13.7

15.1

12.7

14.6

U.S. Residential

25.3

22.2

25.1

19.5

24.6

U.S. Power Plant

31.4

27.1

28.9

28.5

27.3

U.S. Industrial

25.3

24.3

24.7

23.5

24.9

U.S. Plant Fuel

4.9

4.9

5.0

5.0

4.9

U.S. Pipe Distribution

2.8

2.5

2.7

2.5

2.5

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

105.2

94.9

101.6

91.8

98.9

Total U.S. Demand

125.8

115.9

123.6

112.8

114.0

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

Week ended Dec 2

Week ended Nov 25

Week ended Nov 18

Week ended Nov 11

Week ended Nov 4

Wind

14

9

9

15

12

Solar

2

2

3

3

3

Hydro

6

6

7

6

5

Other

2

2

2

3

2

Petroleum

0

0

0

0

0

Natural Gas

33

39

41

38

39

Coal

19

20

18

16

18

Nuclear

22

20

20

20

20

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

Hub

Current Day

Prior Day

Henry Hub (NG-W-HH-SNL)

7.00

6.03

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

6.80

6.30

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

16.84

16.22

Dominion South (NG-PCN-APP-SNL)

5.74

5.90

Chicago Citygate (NG-CG-CH-SNL)

5.93

6.44

Algonquin Citygate (NG-CG-BS-SNL)

10.00

6.61

SoCal Citygate (NG-SCL-CGT-SNL)

18.65

14.38

Waha Hub (NG-WAH-WTX-SNL)

5.19

5.56

AECO (NG-ASH-ALB-SNL)

5.52

7.07

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

Hub

Current Day

Prior Day

New England (EL-PK-NPMS-SNL)

94.75

64.25

PJM West (EL-PK-PJMW-SNL)

73.25

60.50

Ercot North (EL-PK-ERTN-SNL)

47.75

53.00

Mid C (EL-PK-MIDC-SNL)

190.00

160.00

Palo Verde (EL-PK-PLVD-SNL)

134.08

130.00

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

168.50

129.25

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