US natgas prices hold near 14-week high as lower demand offsets lower output

By Scott DiSavino May 7 (Reuters) - U.S. natural gas futures held near a 14-week high on Tuesday as a bullish decline in output and increase in feedgas to liquefied natural gas (LNG) export plants offset a bearish decline in forecast demand over the next two weeks that was greater than previously expected. Front-month gas futures for June delivery on the New York Mercantile Exchange remained unchanged to $2.199 per million British thermal units (mmBtu) at 9:47 a.m. EDT (1347 GMT). On Monday, the contract closed at its highest since Jan. 29 for a second day in a row. That kept the front-month in technically oversold territory for a third straight day for the first time since January 2024. U.S. gas production was down about 11% so far in 2024 after several energy firms, including EQT and Chesapeake Energy , delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in February and March. EQT is currently the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy. In the spot market, meanwhile, U.S. power and gas prices turned negative in Texas, California and Arizona as pipeline maintenance trapped gas in the Permian Shale in West Texas amid low demand for energy and ample hydropower in the West. SUPPLY AND DEMAND Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 96.9 billion cubic feet per day (bcfd) so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was on track to drop by around 3.1 bcfd over the past four days to a preliminary 15-week low of 94.7 bcfd on Tuesday. Meteorologists projected weather across the Lower 48 states would go from mostly near normal now through May 14 to warmer than normal from May 15-22. LSEG forecast gas demand in the Lower 48, including exports, would slide from 92.6 bcfd this week to 90.4 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.4 bcfd so far in May with the return of Freeport in Texas from maintenance and inspection work. That compares with a monthly record of 14.7 bcfd in December. The amount of gas flowing to the 2.1-bcfd Freeport plant was on track to hold near a two-month high of 1.4 bcfd for a third day in a row on Tuesday, up from an average of 0.4 bcfd in April. 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 $10 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia. Week ended Week ended Year ago Five-year May 3 Apr 26 May 3 average Forecast Actual May 3 U.S. weekly natgas storage change (bcf): +89 +59 +71 +81 U.S. total natgas in storage (bcf): 2,573 2,484 2,119 1,923 U.S. total storage versus 5-year average 33.8% 34.9% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year Last Year Average Average 2023 (2018-2022) Henry Hub 2.21 2.20 2.30 2.66 3.60 Title Transfer Facility (TTF) 9.65 10.03 9.97 13.04 14.39 Japan Korea Marker (JKM) 10.47 10.47 10.45 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 44 50 48 75 70 U.S. GFS CDDs 89 83 83 73 75 U.S. GFS TDDs 133 133 131 148 145 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 96.8 97.2 97.5 102.4 94.4 U.S. Imports from Canada 7.2 7.2 6.8 7.3 7.5 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0 Total U.S. Supply 103.9 104.4 104.2 109.7 101.9 U.S. Demand (bcfd) U.S. Exports to Canada 2.1 2.1 2.0 1.8 2.4 U.S. Exports to Mexico 5.8 5.2 6.1 6.3 5.6 U.S. LNG Exports 12.3 12.4 12.2 13.0 8.8 U.S. Commercial 5.9 5.6 5.2 5.4 5.8 U.S. Residential 6.3 6.0 4.9 5.8 6.9 U.S. Power Plant 30.6 32.8 31.5 31.0 28.4 U.S. Industrial 21.8 21.8 21.7 21.4 21.5 U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.8 U.S. Pipe Distribution 1.9 1.9 1.9 1.9 1.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 71.5 73.0 70.1 70.4 69.4 Total U.S. Demand 91.8 92.6 90.4 91.5 86.2 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 77 77 83 107 81 Jan-Jul 78 78 77 102 79 Oct-Sep 79 80 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended May 10 May 3 Apr 26 Apr 19 Apr 12 Wind 13 14 16 16 16 Solar 5 6 6 6 6 Hydro 7 7 7 7 7 Other 1 2 1 2 1 Petroleum 0 0 0 0 0 Natural Gas 41 40 37 37 37 Coal 13 13 13 13 13 Nuclear 20 19 19 20 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.88 1.67 Transco Z6 New York 1.67 1.44 PG&E Citygate 2.40 2.21 Eastern Gas (old Dominion South) 1.57 1.32 Chicago Citygate 1.60 1.46 Algonquin Citygate 1.64 1.43 SoCal Citygate 1.68 1.45 Waha Hub -2.72 0.25 AECO 0.98 0.92 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 29.75 25.00 PJM West 36.50 29.00 Ercot North 36.00 21.75 Mid C 23.50 33.50 Palo Verde -2.00 11.75 SP-15 -3.25 12.50 (Reporting by Scott DiSavino; Editing by Andrea Ricci)