US natural gas prices fall to two-week lows thanks to record production and mild weather

US natural gas prices fall to two-week lows thanks to record production and mild weather

Nov 8 (Reuters) – U.S. natural gas futures fell about 1 percent to a two-week low on Wednesday on record production and expectations of mild weather through late November, keeping heating demand low and allowing utilities to keep pumping gas into storage for a few months. More weeks. Gas futures for December delivery on the New York Mercantile Exchange fell 3.5 cents, or 1.1%, to $3.105 per million British thermal units at 9:29 a.m. EDT (1429 GMT), putting the contract on track. Its lowest close since October 25 for the second day in a row. The bearish factor affecting the futures market for most of this year has been a decline in spot or next-day prices at the Henry Hub in Louisiana. The spot market has traded below front-month futures for 178 out of 214 trading days so far this year, according to data from financial firm LSEG. Next-day prices at Henry Hub fell about 33% to $2.00/MMBtu for Wednesday. Analysts said that as long as the futures market remains in a state of contango — with the second month higher than the first month — and spot prices remain sufficiently lower than the first month to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas and storing it. And sell futures contracts. Looking ahead, the US Energy Information Administration (EIA) said it would not release its weekly gas storage report on Thursday due to a planned systems upgrade. The EIA will resume its regular schedule next week. In Texas, voters on Tuesday approved a constitutional amendment to fund the construction of power plants. The plan is one of several efforts by the state to avoid another energy crisis like the one caused by a deadly winter storm in February 2021 that left millions without power, water and heat for days because an unusually large amount of electricity generation shut down. Meanwhile, Maine voters rejected a proposal to create a public power company, called Pine Tree Power, to take over the operations of Avangrid’s Central Maine Power and Enmax’s Versant Power. Supply and Demand Average gas production in the lower 48 U.S. states has risen to 107 billion cubic feet per day so far in November, up from a record 104.2 billion cubic feet per day in October, LSEG said. Meteorologists expect the weather to remain warmer than normal until November 23. But as the weather turns seasonally cold with the arrival of winter, LSEG expects U.S. gas demand in the lower 48 states, including exports, to jump from 100.6 Bcf/d this week to 100.6 Bcf/d this week. 108.8 billion cubic feet per day next week, and that forecast was higher than LSEG’s forecast on Tuesday. Pipeline exports to Mexico have fallen to an average of 5.4 Bcf/d so far in November, down from 6.5 Bcf/d in October and a record high of 7 Bcf/d in August. On a daily basis, exports to Mexico were on track to fall to an eight-month low of 4.5 billion cubic feet per day on Wednesday. Analysts expect US exports to Mexico to rise once the US-based New Fortress Energy plant in Altamira begins pulling US gas to convert it into liquefied natural gas for export by the end of the year. Gas flows to the seven largest US LNG export plants have risen to an average of 13.8 billion cubic feet per day so far in November, up from 13.7 billion cubic feet per day in October and a record high of 14 billion cubic feet per day in April. Week Ending Week Ending Five Years Ago November 3 November 27 Average Actual Forecast November 3 Weekly change in US natural gas storage (billion cubic feet): 21 79 83 36 Total natural gas stored in the United States (billion cubic feet): 3,800 3,779 3,569 3,610 Total US Storage vs. 5-Year Average 5.3% 5.7% Global Gas Futures (per million Btu) Current day Previous day This month Previous year Five years Last year Average 2022 (2017-2021) Henry Hub 3.11 3.14 6.43 6.54 2.89 Transfer Facility (TTF) 14.16 14.61 35.88 40.50 7.49 Japan-Korea Mark (JKM) 17.36 17.45 28.37 34.11 8.95 LSEG Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days 2 Weeks Total Forecast Current Day Previous day previous year 10 Years 30 Years Norm Norm US GFS HDDs 217 220 302 259 272 US GFS CDDs 12 14 17 15 12 US GFS TDDs 229 234 319 274 284 LSEG US GFS Weekly Supply and Demand Forecast Previous Week Current Next Week This Week Five-Year Week Last Year Average Month US Supply (Bcf/d) US Decline 48 Dry Production 105.6 107.0 107.1 99.4 94.4 US Imports from Canada 7.2 7.5 7.6 7.3 8.3 US LNG Imports 0.0 0.0 0.0 0.0 0.1 Total US Supply 113.2 114.5 11 4.7 106.7 1 02.8 US demand (bcfd) US exports to Canada 2.0 2.3 2.3 2.3 2.9 US exports to Mexico 6.1 5.5 6.2 5.0 5.3 US LNG exports 14.2 13.8 13.6 11.6 7.9 US trade 10.3 8.9 11.1 8.6 11.7 US Residential 14.8 12.0 16.6 11.8 17 5 US power plants 31.0 28.1 27.9 20.1 27.5 US industries 23.9 22.6 23.4 22.7 24.3 US factory fuel 5.2 5.3 5.3 5.2 5.2 US pipeline distribution 2.3 2.1 2.3 2.3 2.3 US vehicle fuel 0.1 0.1 0. 1 0.1 0.1 Total US consumption 87.6 79.1 86.7 70.8 88.6 Total US Demand 109.8 100.6 108. 8 89.7 104.7 Northwest River Forecast Center (NWRFC) at Dallas Dam Current Day Previous Day 2023 2022 2021 % of Normal of Normal of Normal of Normal of Forecast Forecast Actual Actual April-September 92 93 83 107 81 January-July 88 89 77 102 79 October-September 89 89 76 103 81 Percentage of Weekly Power Generation in the United States by Fuel – EIA Weekend Weekend Weekend Weekend Weekend Ending Week Ending November 10 October 3 October 27 October 20 13 Wind 11 14 10 10 Solar 4 4 4 4 Hydro 5 5 5 5 Other 1 2 2 2 Petroleum 0 0 0 0 Natural gas 40 40 42 41 Coal 19 16 17 16 Nuclear 19 19 20 21 SNL Next Day US Natural Gas Prices ($/MMBtu) Hub Current Day Previous Day Henry Hub 2.00 2.71 Transco Z6 New York 1.65 1.51 PG&E Citygate 3.88 4.75 Eastern Gas (Old Dominion South) 1.49 1.48 Chicago Citygate 1.75 1.86 Algonquin Citygate 2.02 1.68 SoCal Citygate 7.65 8.26 Waha Hub 0.94 0.24 AECO 1.48 1.87 SNL US Power Next Day Rates ($ per MW-hour) Hub Current Day Previous Day New England 28.25 31.75 PJM West 32.75 30.00 Irkut North 77.00 36.25 Mid C 80.00 57.75 palo Verdi 54.43 38.50 SP-15 42.00 36.00 (Reporting by Scott DiSavino; Edited by Paul Simao)

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