U.S. natgas posts second-biggest monthly drop ever, holds near 21-month low
Adds latest prices, Freeport LNG restart filing
Jan 31 (Reuters) - U.S. natural gas futures on Tuesday posted their second-biggest monthly drop ever, holdingnear a 21-month low, asa decline in output from extreme cold offsetforecasts for warmer weather and less heating demand next week.
Gas prices have been depressed for weeks due in part to expectations that FreeportLNG's liquefied natural gas (LNG) export plant in Texas wasstill weeks away from pulling in big amounts of gas to produce LNG. Freeport on Tuesday asked federal regulators forpermission to restart one of the plant's three liquefaction trains, which turn gas into LNG.
Output was on track to drop about 3.4 billion cubic feet per day (bcfd) over the past week or so to a preliminary one-month low of 95.8 bcfd as cold weather and winter storms froze oil and gas wells - known as freeze-offs in the energy industry - in several states, including Texas, Oklahoma, Colorado, North Dakota and Pennsylvania.
Despite this week's extreme cold, temperatures in the U.S. Lower 48 states have averaged about 42.2 degrees Fahrenheit (5.7 Celsius) so far in January, putting this month on track to be the warmest January since 2006 when the mercury averaged a record 42.8 F, according to data from Refinitiv and the federal government.
Front-month gas futures NGc1 for March delivery rose 0.7 cents, or 0.3%, to settle at $2.684 per million British thermal units.On Monday, the contract closed at its lowest level since April 2021.
Despite the small increase, thecontract remained inoversold territory with a relative strength index (RSI) below 30 for a second day in a row and the 15th time this year.
For the month, the front-month droppedabout 40%, putting it on track for its second-biggest monthly loss on record after plungingby 42% in January 2001.
Meteorologists forecast temperatures across much of the U.S. Lower48 states would remain mostly colder than normal through Feb. 4 before turning warmer than normal from Feb. 5 through at least Feb. 15.
With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 134.5 bcfd this week to 128.8 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Monday, while its forecast for next week was lower.
That should allow utilities to continue pulling less gas from storage for a fourth or fifth week in a row. EIA/GAS NGAS/POLL
The biggest wild card in the gas market remains when Freeport's export plant will exit a seven-month outage caused by a fire in June 2022.
Freeport is the second-biggest U.S. LNG export plant, and traders expect prices to rise once it starts pulling in big amounts of gas, boosting demand for the fuel. The plant can pull in about 2.1 bcfd of gas daily, about 2% of what U.S. gas producers take from the ground.
Freeport has been pulling in small amounts of gas since Jan. 26 when federal regulators approved the company's plan to start cooling down parts of the plant.
Several analysts have said they do not expect Freeportto start producing LNG until mid-February, March or later.
Some vessels have turned away from Freeport in recent weeks, possibly including Corcovado LNG over the past 24 hours, which seems to be heading for another port.
But several tankers were still waiting in the Gulf of Mexico to pick up LNG from the plant, including Prism Courage (since around Nov. 4), Prism Agility (Jan. 2), Prism Brilliance (Jan. 26) and Kmarin Diamond (Jan. 26).
Week ended Jan 27 (Forecast)
Week ended Jan 20 (Actual)
Year ago Jan 27
Five-year average Jan 27
U.S. weekly natgas storage change (bcf):
U.S. total natgas in storage (bcf):
U.S. total storage versus 5-year average
Global Gas Benchmark Futures ($ per mmBtu)
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Prior Year Average 2022
Five Year Average (2018-2022)
Henry Hub NGc1
Title Transfer Facility (TTF) TRNLTTFMc1
Japan Korea Marker (JKM) JKMc1
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
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Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
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U.S. Supply (bcfd)
U.S. Lower 48 Dry Production
U.S. Imports from Canada
U.S. LNG Imports
Total U.S. Supply
U.S. Demand (bcfd)
U.S. Exports to Canada
U.S. Exports to Mexico
U.S. LNG Exports
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SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Henry Hub NG-W-HH-SNL
Transco Z6 New York NG-CG-NY-SNL
PG&E Citygate NG-CG-PGE-SNL
Eastern Gas (old 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)
New England EL-PK-NPMS-SNL
PJM West EL-PK-PJMW-SNL
Ercot North EL-PK-ERTN-SNL
Mid C EL-PK-MIDC-SNL
Palo Verde EL-PK-PLVD-SNL
Reporting by Scott DiSavino; Editing by Paul Simao
For Refinitiv type ENERGY in Eikon search bar and then go to the GAS drop down and the NORTH AMERICA drop down or see: cpurl://apps.cp./cms/?pageid=usa-gas
For Interactive Map, type 'Interactive Map' in the box at upper left of the Reuters nEiko terminal.
For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html
For next-day SNL U.S. gas prices, see: 0#SNL-NG
For next-day SNL U.S. power prices, see: 0#SNL-PWR
For U.S. natgas price and storage polls, see: NGAS/POLL
For U.S. nuclear power outages, see: NUKE/
For U.S. Northwest hydro power report, see: NWRFC
For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44
For the U.S. natural gas speed guide, see: USGAS
For the U.S. power speed guide, see: USPOWER
To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)
NYMEX Henry Hub options and futures combined 0#3CFTC023651
NYMEX Henry Hub futures only 0#1CFTC023651
ICE Henry Hub options and futures combined 0#3CFTC023391
NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B
NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C
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