US natgas prices gain 3% to six-week high with extreme cold coming
Adds latest prices
By Scott DiSavino
Jan 5 (Reuters) -U.S. natural gas prices climbed about 3% to a six-week high onFriday forecasts that extreme cold weather in mid- to late January will boost demand for the fuel for heating to its highest since hitting a record during a winter storm in December 2022.
In addition to sky-high demand, extreme cold could cause production to drop by freezing oil and gas wells, pipes and other energy equipment, which the energy industry calls freeze-offs.
Traders also noted that gas prices were up for a fourth day in a row because output was already down since hitting record highs in December and as record amounts of gas continued to flow to U.S. liquefied natural gas (LNG) export plants.
Prices rose despiteforecasts for mild weather this week and next, and ample amounts of gas in storage. Analysts said therewas currently about 12.1% more gas in storage than normal for this time of year. EIA/GAS NGAS/POLL
Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange rose 7.2 cents, or 2.6%, to settle at $2.893 per million British thermal units (mmBtu), their highest close since Nov. 22.
For the week, the front-month gainedabout 15% after sliding about 4% last week. That was the biggest weekly percentage gain since mid-June.
Even though the coldest part of winter was still coming, many traders said winter futures for November-March likely already peaked at $3.608 per mmBtu on Nov. 1 due primarily to recent record production and ample supplies of gas in storage.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states fell to 107.4 billion cubic feet per day (bcfd) so far in January, down from a monthly record of 108.5 bcfd in December.
Meteorologists projected the nation's weather would remain mostly warmer than normal through Jan. 11 before turning colder than normal from Jan. 12-20.
With colder weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 135.0 bcfd this week to 135.9 bcfd next week and 150.1 bcfd in two weeks. The forecasts for this week and next were higher than LSEG's outlook on Thursday.
On a daily basis, total U.S. demand, including exports, would reach 158.2 bcfd on Jan. 16, according to LSEG's latest forecasts. That would be the most since winter storm Elliott in December 2022 but would fall short of the daily all-time high of 162.5 bcfd on Dec. 23, 2022, according to federal energy data from S&P Global Commodities Insights.
U.S. pipeline exports to Mexico rose to an average of 5.5 bcfd so far in January, up from 4.6 bcfd in December but still well below the monthly record of 7.0 bcfd in August.
Analysts expect exports to Mexico to rise in coming months once U.S.-based New Fortress Energy's NFE.O plant in Altamira in Mexico starts pulling in U.S. gas to turn into LNG for export.
Gas flows to the seven big U.S. LNG export plants rose to an average of 14.8 bcfd so far in January, up from a monthly record of 14.7 bcfd in December.) in Asia JKMc1. NG/EU
Week ended Jan 5 Forecast | Week ended Dec 29 Actual | Year ago Jan 5 | Five-year average Jan 5 | ||
U.S. weekly natgas storage change (bcf): | -123 | -14 | +11 | -87 | |
U.S. total natgas in storage (bcf): | 3,353 | 3,476 | 2,934 | 2,990 | |
U.S. total storage versus 5-year average | 12.1% | 13.0% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2023 | Five Year Average (2018-2022) |
Henry Hub NGc1 | 2.75 | 2.82 | 3.42 | 2.66 | 3.60 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 11.10 | 10.83 | 19.79 | 13.04 | 14.39 |
Japan Korea Marker (JKM) JKMc1 | 11.56 | 11.50 | 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 Norm | 30-Year Norm |
U.S. GFS HDDs | 473 | 467 | 328 | 439 | 445 |
U.S. GFS CDDs | 1 | 1 | 5 | 4 | 3 |
U.S. GFS TDDs | 474 | 468 | 333 | 443 | 448 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2019-2023) Average For Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 108.8 | 107.9 | 107.4 | 100.7 | 93.8 |
U.S. Imports from Canada8 | 8.5 | 9.1 | 9.0 | 8.7 | 9.3 |
U.S. LNG Imports | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 |
Total U.S. Supply | 117.3 | 117.1 | 116.4 | 109.4 | 103.4 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 3.4 | 3.0 | 2.7 | 3.1 | 2.7 |
U.S. Exports to Mexico | 5.4 | 5.3 | 5.0 | 5.4 | 5.3 |
U.S. LNG Exports | 14.7 | 14.7 | 14.7 | 11.9 | 8.9 |
U.S. Commercial | 12.8 | 15.6 | 16.5 | 13.4 | 16.6 |
U.S. Residential | 20.3 | 25.9 | 28.1 | 21.4 | 28.6 |
U.S. Power Plant | 31.0 | 36.5 | 34.7 | 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 | 3.0 | 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 | 112.1 | 113.4 | 95.4 | 108.7 |
Total U.S. Demand | 120.0 | 135.0 | 135.9 | 115.8 | 125.6 |
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam | Current Day % of Normal Forecast | Prior Day % of Normal Forecast | 2023 % of Normal Actual | 2022 % of Normal Actual | 2021 % of Normal Actual |
Apr-Sep | 78 | 79 | 83 | 107 | 81 |
Jan-Jul | 80 | 80 | 77 | 102 | 79 |
Oct-Sep | 81 | 81 | 76 | 103 | 81 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Jan 5 | Week ended Dec 29 | Week ended Dec 22 | Week ended Dec 15 | Week ended Dec 8 | |
Wind | 8 | 11 | 11 | 11 | 12 |
Solar | 2 | 2 | 2 | 3 | 3 |
Hydro | 6 | 7 | 6 | 6 | 5 |
Other | 2 | 2 | 2 | 2 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
Natural Gas | 42 | 40 | 41 | 41 | 40 |
Coal | 19 | 16 | 18 | 17 | 17 |
Nuclear | 20 | 22 | 20 | 20 | 21 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | |||
Henry Hub NG-W-HH-SNL | 2.83 | 2.57 | |||
Transco Z6 New York NG-CG-NY-SNL | 3.57 | 3.77 | |||
PG&E Citygate NG-CG-PGE-SNL | 5.93 | 4.04 | |||
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 2.31 | 2.32 | |||
Chicago Citygate NG-CG-CH-SNL | 2.58 | 2.48 | |||
Algonquin Citygate NG-CG-BS-SNL | 5.36 | 6.34 | |||
SoCal Citygate NG-SCL-CGT-SNL | 5.64 | 3.95 | |||
Waha Hub NG-WAH-WTX-SNL | 2.54 | 2.31 | |||
AECO NG-ASH-ALB-SNL | 1.85 | 1.44 | |||
SNL U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | |||
New England EL-PK-NPMS-SNL | 58.75 | 52.75 | |||
PJM West EL-PK-PJMW-SNL | 42.50 | 43.75 | |||
Ercot North EL-PK-ERTN-SNL | 23.00 | 19.50 | |||
Mid C EL-PK-MIDC-SNL | 57.25 | 63.67 | |||
Palo Verde EL-PK-PLVD-SNL | 55.75 | 35.00 | |||
SP-15 EL-PK-SP15-SNL | 56.25 | 41.75 |
Reporting by Scott DiSavino; Editing by Emelia Sithole-Matarise and Jonathan Oatis
For gas data on LSEG's Eikon type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.
For Interactive Map, type 'Interactive Map' in the box at upper left of the Eikon 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
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.