October 20 (Reuters) – US natural gas futures slipped about 2% to a four-week low on Wednesday as predictions of mild weather and sub-normal heating demand were expected until at least early November.
Two weeks ago, US gas prices rose to their highest level since 2008 as global competition for liquefied natural gas (LNG) was expected to keep demand for US exports strong. But after weeks of mild weather, US prices have fallen about 25% as belief grows that the United States will have more than enough gas supplies for the winter heating season.
Around the world, however, gas prices have soared to record highs as utilities scramble for more gas to replenish dangerously low stocks in Europe before winter and meet insatiable demand in Asia. High prices and energy shortages in both regions have already resulted in some industries stopping or restricting their manufacturing activities.
But no matter how high the global prices rise, the US LNG export facilities were already almost at full capacity and will not be able to produce more LNG until later in the year.
Analysts expect U.S. gas supplies to exceed 3.5 trillion cubic feet (tcf) by the start of the winter heating season in November, which they think would be a comfortable level despite being below the five-year average of 3.7 trillion cubic feet. NGAS / SURVEY
In Europe, analysts say inventory levels are around 15% below normal for this time of year.
Front Month Gas Futures NGc1 November delivery fell 10.9 cents, or 2.1%, to $ 4.979 per million British thermal units (mmBtu) at 8:47 am EDT (1247 GMT), bringing the contract to its lowest level since September 23 .
The recent declines in the November front month have increased the premium of the December futures versus November NGX21-Z21 to its highest level since August 2010.
The bottom 48 US states rose to an average of 92.0 billion cubic feet per day (bcfd) in October, up from 91.1 billion cubic feet per day in September. This contrasts with a monthly record of 95.4 billion cubic feet in November 2019.
The weather is still getting seasonally cooler and Refinitiv predicts that average U.S. gas demand, including exports, would rise from 85.7 billion cubic feet this week to 87.9 billion cubic feet next week as more households and companies turn on their heaters. Those forecasts were lower than what Refinitiv expected on Tuesday.
With gas prices close to $ 32 per mmBtu in Europe TRNLTTFMc1 and $ 35 in Asia JKMc1, down from just $ 5 in the United States, traders said buyers around the world will continue to buy all of the LNG the United States could produce.
Refinitiv said the amount of gas flowing to U.S. LNG export facilities averaged 10.4 billion cubic feet so far in October, just like in September, but is expected to increase in the coming weeks as more liquefaction trains come out of maintenance outages.
But the United States only has the capacity to convert about 10.5 billion cubic feet of gas to LNG.
Global markets will have to wait until the end of this year to get more when the sixth liquefaction train at Cheniere Energy Inc. LNG.A Venture Global LNG’s Sabine Pass and Calcasieu Pass are expected to begin test-mode production of LNG in Louisiana.
In the electricity market, next-day prices for Wednesday in the ERCOT North Hub EL-PK-ERTN-SNL in Texas rose from $ 44 for Tuesday to $ 145 per megawatt hour as power demand climbs from around 50,000 megawatts (MW) on Tuesday to an expected 55,000 MW on Wednesday.
Traders said electricity demand was expected to spike as consumers turn up their air conditioners, with temperatures in Houston projected to rise from 70 Fahrenheit (24 Celsius) earlier in the week to the 80’s for the next week or so.
Week until October 15th (forecast)
Week until October 8th (actual)
Year ago Oct 15
Five-year average Oct 15
Weekly US Natgas Storage Change (bcf):
US total natural gas in storage (bcf):
Total storage in the US compared to the 5-year average
Global Gas Benchmark Futures ($ per mmBtu)
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Henry Hub NGc1
Title Transfer Facility (TTF) TRNLTTFMc1
Japan-Korea marker (JKM) JKMc1
Refinitive heating (HDD), cooling (CDD) and total (TDD) degree days
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US Lower 48 Dry Production
US imports from Canada
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US demand (bcfd)
US exports to Canada
US exports to Mexico
US LNG exports
US residential real estate
US power plant
U.S. vegetable fuel
US pipe distribution
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SNL US Next Day Natural Gas Prices ($ per mmBtu)
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Transco Z6 New York NG-CG-NY-SNL
PG&E Citygate NG-CG-PGE-SNL
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 US Power next-day pricing ($ per megawatt hour)
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New England EL-PK-NPMS-SNL
PJM West EL-PK-PJMW-SNL
Ercot North EL-PK-ERTN-SNL
Middle C EL-PK-MIDC-SNL
Palo Verde EL-PK-PLVD-SNL
(Reporting by Scott DiSavino; editing by Bernadette Baum)
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.